Tax on income referred to in section 102 or 103 or 104 or 105
[Section-195 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 195(1) of Income Tax Act 2025
195(1) Where the total income of an assessee—
- 195(1)(a) includes any income referred to in section 102 or 103 or 104 or 105 or 106 and reflected in the return of income furnished under section 263; or
- 195(1)(b) determined by the Assessing Officer includes any income referred to in any of the said sections, if such income is not covered under clause (a),
the income-tax payable shall be the aggregate of—
- (i) income-tax calculated on the income referred to in clauses (a) and (b), at the rate of 60%; and
- (ii) income-tax with which the assessee would have been chargeable had his total income been reduced by income referred to in clause (i).
Section 195(2) of Income Tax Act 2025
195(2) Irrespective of anything contained in this Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing his income referred to in sub-section (1)(a) and (b).
FAQs on Section 195 of Income Tax Act 2025
What is the rate of tax on income referred to in sections 102 to 106?
→ Such income is taxed at a flat rate of 60% as per section 195(1)(i) of the Act, irrespective of the total income or slab rate applicable.
What types of income are covered under sections 102, 103, 104, 105, and 106?
→ Each section covers specific types of income. You would need to refer to each section individually to determine whether your income falls under any of these. Examples may include unexplained credits, investments, expenditures, or other specified receipts.
Is this 60% tax rate applicable even if the assessee has no other income?
→ Yes. Even if the assessee has no other income, income under sections 102–106 is taxed at 60%.
Can deductions or allowances be claimed against such income?
→ No. Section 195(2) clearly states that no deduction for expenditure, allowances, or set-off of any loss is allowed while computing income referred to in section 195(1)(a) or (b).
What does “reflected in the return of income under section 263” mean?
→ It means the income under sections 102 to 106 is disclosed voluntarily by the assessee in the income tax return filed as per section 263.
What if such income is detected by the Assessing Officer?
→ If not disclosed in the return but determined during assessment, it falls under section 195(1)(b) and still attracts tax at 60%.
Is there any surcharge or cess applicable in addition to the 60% tax?
→ Section 195 does not mention surcharge or cess, but they may apply as per the general provisions of the Act unless specifically excluded.
How is the remaining income taxed?
→ The rest of the income (excluding income under 102–106) is taxed as per normal applicable slab rates. The total tax is the sum of (i) tax @ 60% on specified income, and (ii) tax on balance income.
Can an assessee pay advance tax on such income?
→ If the assessee expects such income and includes it in their computation, they are expected to pay advance tax accordingly. Otherwise, interest for shortfall may apply.
Does this tax provision apply to all taxpayers (individuals, firms, companies)?
→ Yes, section 195 applies to all “assessees” as defined in the Act, without distinguishing by type or status.
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