Section 86A

CHAPTER VII — INCOMES FORMING PART OF TOTAL INCOME ON WHICH NO INCOME-TAX IS PAYABLE

SECTION 86A — DEDUCTION FROM TAX ON CERTAIN SECURITIES (OMITTED)

Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)

STATUTORY POSITION (Income-tax Act, 1961, as in force)

Marginal heading (as originally enacted): Deduction From Tax On Certain Securities

86A. [Omitted by the Finance Act, 1988, w.e.f. 1-4-1989. Original section was inserted by the Finance Act, 1965, w.e.f. 1-4-1965.]

A. SECTION COMMENTARY

A.1 Original subject-matter (pre-1968 position)

Section 86A provided for a deduction from tax in respect of income from certain securities. It allowed the assessee a reduction in the income-tax otherwise payable, referable to income from specified securities, as part of the scheme of relief on interest from Government and other approved securities that operated in the 1960s-1980s.

A.2 Insertion and statutory history

Section 86A was inserted by the Finance Act, 1965, w.e.f. 1-4-1965, and omitted by the Finance Act, 1988, w.e.f. 1-4-1989.

A.3 Omission and migration of the provision

Section 86A was not carried into a single successor section. It was omitted by the Finance Act, 1988 (w.e.f. 1-4-1989) as the scheme of securities-interest reliefs and the machinery for tax deduction/credit on securities was rationalised; the field of interest on securities is now governed by the ordinary charging provisions (head 'Income from other sources', section 56) read with the TDS provisions on interest on securities (section 193) and such interest exemptions as section 10(15) provides.

A.4 Current status

Section 86A does not exist as a live operative provision of the Income-tax Act, 1961. The Chapter VII slot bears only the omission entry reproduced above; the field it once covered is now governed by the ordinary charging and machinery provisions noted in A.3.

A.5 CA practitioner pointers

(1) Do not cite section 86A in a current return, computation, assessment or appeal — it has stood omitted since the date shown above and any reference to it is liable to be treated as a mistake. (2) Where the receipt in question is of the kind the old section addressed, frame the claim under the successor provision and satisfy its conditions. (3) When relying on older judgments decided on the omitted section, treat them as authority on the underlying concept only, and check that the successor provision has not altered the conditions on which the earlier ruling turned.

B. FA 2026 IMPACT NOTE

The Finance Act, 2026 does not revive or amend section 86A; the section remains omitted. FA 2026 makes no change to Chapter VII. (For completeness, the only live section of Chapter VII — section 86 — is also not amended by FA 2026.)

Transition note: the Income-tax Act, 2025 (which commences on 1 April 2026 and replaces the 1961 Act) does not re-enact this omitted provision under its old number; the relief, to the extent it still exists, is found in the corresponding deduction/exemption of the new Act.

C. CASE LAW

No case law subsists under section 86A as a live provision: it was omitted with effect from the date noted above, so no assessment is decided under it today. The provision was not carried into a single identifiable successor that has generated a settled body of authority of its own; any dispute on the underlying receipt is decided under the general charging provisions and the head of income to which it belongs. Consistent with the accuracy discipline of this treatise, no case is listed under this section.