Income Tax Act 2025: Section 189 for Tax Year 2026-27

Interpretation

[Section-189 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]

In this Chapter, unless the context otherwise requires,—

• (a) “banking company” means a company to which the provisions of the Banking Regulation Act, 1949 applies and includes any bank or banking institution referred to in section 51 of that Act;
• (b) “primary agricultural credit society”, and “primary co-operative agricultural and rural development bank” shall have the meanings respectively assigned to them in section 149(6);
• (c) “specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place;
• (d) “specified advance” means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place.

FAQs on Section 189 of Income Tax Act 2025

1. What is the purpose of Section 189 under the Income Tax Act, 2025?
   → Section 189 defines specific terms used in its Chapter to ensure clarity and uniform interpretation across provisions related to transactions involving immovable property.
2. From when is Section 189 effective?
   → Section 189 is effective from 1st April, 2026, as per the Income Tax Act, 2025.

3. What is a “banking company” under Section 189?
   → A “banking company” is a company to which the Banking Regulation Act, 1949 applies. It also includes any bank or banking institution referred to in section 51 of that Act.
4. What is meant by “primary agricultural credit society” in this context?
   → The term “primary agricultural credit society” has the same meaning as assigned in section 149(6) of the Income Tax Act, 2025.
5. What does “primary co-operative agricultural and rural development bank” mean?
   → It also has the meaning ascribed to it under section 149(6) of the Income Tax Act, 2025.
6. How is “specified sum” defined in Section 189?
   → “Specified sum” means any amount receivable—either as advance or otherwise—connected to the transfer of an immovable property, whether or not the actual transfer occurs.
7. What is a “specified advance” under this section?
   → “Specified advance” refers to any advance payment made (by any name) in connection with a proposed transfer of an immovable property, irrespective of whether the transfer actually happens.

8. Is it necessary for the immovable property to actually be transferred for a specified sum or advance to be considered?
   → No, both “specified sum” and “specified advance” apply even if the transfer does not ultimately take place.
9. Can the same transaction involve both a “specified sum” and a “specified advance”?
   → While they are similarly worded, the distinction may depend on the legal form and intent—“specified advance” typically implies an upfront payment; “specified sum” could encompass broader receivables.
10. Are co-operative banks covered under the term “banking company”?
    → Only if they fall under the Banking Regulation Act, 1949 and are mentioned in section 51 of that Act.