Expenditure on agricultural extension project and skill development project
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 47(1) of Income Tax Act 2025
47(1) Any expenditure (excluding cost of any land or building) incurred, on––
- (a) agricultural extension project by any assessee; or
- (b) any skill development project by a company,
shall be allowed as a deduction, in the tax year in which such expenditure is incurred provided such project is notified as per the guidelines issued by the Board.
Section 47(2) of Income Tax Act 2025
47(2) If a deduction under this section is claimed and allowed for any tax year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed for such expenditure under any other provision of this Act for the same or any other tax year.
FAQs on Section 47 of Income Tax Act 2025
1. What is Section 47 of the Income Tax Act, 2025 about?
Section 47 provides for the allowability of deductions in respect of expenditure incurred on agricultural extension projects or skill development projects, subject to conditions.
2. When does Section 47 come into effect?
It is applicable from the tax year beginning on or after 1st April, 2026.
3. Who can claim deduction under Section 47?
- Any assessee can claim deduction for agricultural extension projects.
- Only companies can claim deduction for skill development projects.
4. What is meant by an “agricultural extension project”?
It refers to projects aimed at improving agricultural practices, productivity, and awareness, as per the Board’s notified guidelines.
5. What is meant by a “skill development project”?
It includes programs aimed at training individuals in industry-relevant skills to enhance employability, as notified by the Board.
6. Are these projects required to be notified?
Yes. Deduction is allowed only if the project is notified as per guidelines issued by the Central Board of Direct Taxes (CBDT).
7. What type of expenditure is eligible?
Only revenue and capital expenditure excluding the cost of land and building is eligible.
8. Can expenditure on land or building be claimed under this section?
❌ No. Any expenditure related to the cost of land or building is specifically excluded.
9. In which tax year can the deduction be claimed?
In the same tax year in which the expenditure is actually incurred.
10. Is prior approval or notification required before incurring the expenditure?
Yes. The project must be notified under the Board’s guidelines before claiming the deduction.
11. Can deduction under Section 47 be claimed in addition to other sections?
❌ No. As per Section 47(2), once claimed and allowed under this section, no other deduction is permitted under any other provision for the same expenditure.
12. Can double deduction be claimed in different tax years?
❌ No. Deduction for the same expenditure is allowed only once, in the year it is incurred.
13. Is there a monetary cap or ceiling for the deduction under Section 47?
As per the current provision, there is no specified monetary limit, but conditions under the Board’s guidelines may impose limits.
14. Is weighted deduction allowed under Section 47?
No. Only 100% of the actual eligible expenditure is allowed as deduction.
15. What documentation is required to claim this deduction?
Details like:
- Project notification reference by the Board,
- Nature and amount of expenditure,
- Date of incurrence,
- Audit reports (if applicable), must be maintained and submitted during assessment.
16. Can individuals or HUFs claim deduction for skill development projects?
❌ No. Only companies are eligible for deduction for skill development projects.
17. Can companies claim for both types of projects?
✅ Yes. Companies may claim deduction under Section 47 for both agricultural extension and skill development projects, if all conditions are fulfilled.
18. Are in-house training programs covered as skill development projects?
Only if the training programs are notified and recognized under the guidelines issued by the Board.
19. What happens if the project is not notified but expenditure is incurred?
Deduction under Section 47 will not be allowed if the project is not notified, even if other conditions are met.
20. Is there any reporting requirement in the income tax return?
Yes, details of such expenditure and relevant Board notifications must be disclosed in the ITR.
Section 47 of the Income Tax Act, 2025, introduces a mechanism to encourage investments in agricultural extension and skill development projects by allowing deductions for expenditures incurred on such projects.
