Rent, rates, taxes, repairs and insurance
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 28(1) of Income Tax Act 2025
28(1) The following amounts shall be allowed as deduction in respect of premises, machinery, plant or furniture, wholly and exclusively, used for the purposes of the business or profession:––
- (a) any premium paid in respect of insurance against risk of damage or destruction thereof;
- (b) land revenue, local rates or municipal taxes paid;
- (c) rent paid, when the premises are occupied by the assessee as a tenant;
- (d) amount paid on account of current repairs, not being capital expenditure, when the premises are occupied by the assessee otherwise than as a tenant; and
- (e) cost of repairs, not being capital expenditure, when the premises occupied by the premises occupied by the assessee as a tenant.
Section 28(2) of Income Tax Act 2025
28(2) In case where the premises, building, machinery, plant or furniture is partly used or not wholly and exclusively used for the purposes of the business or profession, the deduction allowable under sub-section (1) shall be restricted to the fair proportionate part thereof as determined by the Assessing Officer, having regard to the usage for the purposes of the business or profession.
FAQs on Section 28 of Income Tax Act 2025
1. What does Section 28(1) allow?
It allows deductions for specific expenses related to premises, machinery, plant, or furniture that are wholly and exclusively used for business or profession.
2. What are the types of expenses allowed as deduction under this section?
- Insurance premiums against damage/destruction
- Land revenue, municipal taxes, local rates
- Rent (if assessee is a tenant)
- Repairs (if assessee is owner or tenant, depending on situation)
3. Are capital repairs allowed as a deduction?
No. Only current repairs, not being capital in nature, are allowed under this section.
4. Is rent deductible for all taxpayers?
Only if the premises are occupied as a tenant. Owners claiming depreciation cannot also claim rent.
5. Can a taxpayer claim repair expenses even if they are not the owner?
Yes, tenants can claim non-capital repair expenses if they incur them on rented premises.
6. What if the assessee owns the premises?
If the premises are owned (not rented), the assessee can only claim current repair costs, not rent.
7. Are municipal taxes and land revenue allowed as deductions?
Yes, if they are paid and relate to business-use assets.
8. What kind of insurance premium is deductible?
Premium paid to insure assets against damage or destruction (e.g., fire, flood) is allowed.
9. What happens if an asset is partly used for business and partly for personal use?
Only a fair and proportionate part of the expenses is deductible.
10. Who decides the proportion of business use?
The Assessing Officer determines the appropriate proportion based on the actual use.
11. Are capital expenditures ever allowed under this section?
No. Capital repairs or improvements are not allowed here—they fall under capital asset treatment.
12. Can deductions be claimed if the asset is not in use?
No. Deductions apply only if the asset is actively used for business/profession.
Section 28(1) & (2) of the Income-tax Act, 2025 ensures that business taxpayers can claim necessary operational costs related to using tangible assets. However, it excludes capital expenses and requires exclusive business use or proportionate allocation. This maintains a balance between genuine business deductions and personal benefit exclusion.
