Income Tax Act 2025: Section 95 for Tax Year 2026-27

Profits chargeable to tax

[Section-95 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]

The provision of section 38(1)(a) shall apply in computing the income of an assessee under section 92, as they apply in computing the income of an assessee under the head “Profits and gains of business or profession”.

FAQs on Section 95 of Income Tax Act 2025

Q1: What does Section 95 of the Income Tax Act, 2025 deal with?
Section 95 deals with profits chargeable to tax under the Act.

Q2: From when is Section 95 effective?
Section 95 is effective from 1st April, 2026.

Q3: How is the income computed under Section 95?
Income under Section 95 is computed by applying the provisions of section 38(1)(a).

Q4: What is section 38(1)(a) referred to in Section 95?
Section 38(1)(a) prescribes provisions for computing income under the head “Profits and gains of business or profession”.

Q5: In computing income under Section 92, which provisions are applicable according to Section 95?
The provisions of section 38(1)(a) are applicable.

Q6: Which head of income is relevant for comparison under Section 95?
The head “Profits and gains of business or profession” is relevant.

Q7: Is Section 95 applicable to all assessees?
Section 95 applies to the computation of income under section 92 for relevant assessees.

Q8: Does Section 95 independently define a method of computation?
No, Section 95 refers to applying the method already outlined under section 38(1)(a).

Q9: What is the connection between Section 92 and Section 95?
Section 95 states that while computing income under Section 92, the rules of Section 38(1)(a) should be followed.

Q10: Can Section 95 be applied without referring to Section 38(1)(a)?
No, the computation method under Section 95 mandates reference to Section 38(1)(a).

Q11: Is Section 95 applicable before 1st April, 2026?
No, Section 95 applies from 1st April, 2026, onwards.

Q12: Does Section 95 introduce a new computation mechanism?
No, it adopts the existing computation method specified under Section 38(1)(a).

Q13: For which specific income head is the computation analogy drawn in Section 95?
The computation analogy is drawn with the “Profits and gains of business or profession” head.

Q14: Is Section 95 a standalone computation section?
No, it depends on provisions from another section, i.e., Section 38(1)(a).

Q15: Why is Section 95 important?
Section 95 ensures consistency in the method of income computation under different circumstances specified in the Act.