Interpretation

Section 189 — INTERPRETATION

Section 189 of the Income-tax Act, 2025 corresponds to the Explanations to ss. 269SS and 269T of the Income-tax Act, 1961.

STATUTORY ARCHITECTURE

Section 189 is the interpretation clause of Chapter XII (Mode of payment in certain cases, etc.). It defines four expressions "for the purposes of this Chapter, unless the context otherwise requires". The operative rules that use them are in s. 185 (mode of taking or accepting certain loans, deposits and specified sum), s. 186 (mode of undertaking transactions), s. 187 (acceptance of payment through prescribed electronic modes) and s. 188 (mode of repayment of certain loans or deposits or specified advances).

KEY ELEMENTS

• Clause (a), "banking company": a company to which the provisions of the Banking Regulation Act, 1949 apply, including any bank or banking institution referred to in section 51 of that Act.
• Clause (b), "primary agricultural credit society" and "primary co-operative agricultural and rural development bank": these take the meanings assigned to them in s. 150.
• Clause (c), "specified sum": any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. The expression is used in s. 185.
• Clause (d), "specified advance": any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place. The expression is used in s. 188.

CHANGES FROM THE 1961 ACT

The 1961 Act gave these definitions separately, in the Explanation to s. 269SS and the Explanation to s. 269T, each "for the purposes of this section". Section 189 gathers them into one clause for the whole Chapter. The wording of "banking company", "specified sum" and "specified advance" is carried over. Two 1961 definitions are not in s. 189: "co-operative bank" is defined for the whole Act in s. 2(31), and "loan or deposit" is defined separately in s. 185(5) and s. 188(5), with the two different meanings that the Explanations to ss. 269SS and 269T gave it. In the 1961 Act the two credit-society terms took their meanings from the Explanation to s. 80P(4); s. 189(b) refers instead to s. 150.

PRACTITIONER NOTES

• Clause (b) refers to s. 150 for the meanings of the two credit-society terms. The Finance Act, 2026 substituted s. 150 (w.e.f. 1-4-2026), which now deals with a deduction for federal co-operatives, and inserted s. 149(6), which now defines "primary agricultural credit society" and "primary co-operative agricultural and rural development bank" for the purposes of s. 149. The reference in s. 189(b) reads "section 150" in the text as amended, so the definitions should be traced to s. 149(6) with that in mind.
• "Specified sum" and "specified advance" both apply "whether or not the transfer takes place", so a sum received or repaid on an immovable-property transfer that falls through is still within ss. 185 and 188.
• "Loan or deposit" has two meanings in the Chapter: for s. 185 it means a loan or deposit of money; for s. 188 it means a loan or deposit of money repayable after notice or after a period, and, for a person other than a company, a loan or deposit of any nature.

CROSS-REFERENCES

• s. 185 — uses "banking company", the two credit-society terms and "specified sum"; s. 185(5) defines "loan or deposit" for that section.
• s. 186 — uses "banking company".
• s. 188 — uses "banking company", the two credit-society terms and "specified advance"; s. 188(5) defines "loan or deposit" for that section.
• s. 2(31) — "co-operative bank".
• s. 149(6) — definitions of the two credit-society terms, inserted by the Finance Act, 2026.
• s. 150 — referred to in clause (b); substituted by the Finance Act, 2026.
• Explanations to ss. 269SS and 269T of the 1961 Act — the corresponding provisions.