Section 28 — Rent Rates Taxes Repairs Insurance | ITA 2025

Section 28 prescribes deduction for rent, rates, taxes, current repairs, and insurance premiums on premises / plant & machinery / furniture used for business. The substantive rule: revenue expenditure deductible; capital expenditure…

Section 28 — RENT, RATES, TAXES, REPAIRS AND INSURANCE

Statutory text — Income-tax Act, 2025

Marginal note — Rent, rates, taxes, repairs and insurance

(1) The following amounts shall be allowed as deduction in respect of premises, machinery, plant or furniture 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 to the premises, not being in the nature of capital expenditure, when the premises are occupied by the assessee otherwise than as a tenant;

(e) amount paid on account of cost of repairs, not being in the nature of capital expenditure, when the premises are occupied by the assessee as a tenant and where he has undertaken to bear the cost of repairs to the premises; and .

(f) the amount paid on account of current repairs to machinery, plant or furniture, not being in the nature of capital expenditure.

(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. Deductions related to employee welfare.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 — s. 28	INCOME-TAX ACT, 1961 — ss. 30 + 31
Rent, rates, taxes, repairs (premises)	1961 s. 30 — same
Repairs and insurance (machinery / plant / furniture)	1961 s. 31 — same
Capital repairs excluded	Same

Section 28 of the 2025 Act consolidates 1961 ss. 30 and 31 — rent, rates, taxes, repairs, insurance — into a single section. Revenue / capital distinction preserved.

JUDICIAL EVOLUTION — Current vs. Capital Repairs

Empire Jute Co. Ltd. v. CIT, (1980) 124 ITR 1 (SC) — the foundational distinction: revenue expenditure preserves the asset's usefulness; capital expenditure enhances the asset's character or extends its life. Routine maintenance, painting, leak repairs are revenue; major reconstruction, conversion to alternative use, or significant capacity enhancement are capital.

HELD: If the expenditure is for the initiation of the business or for extension of the business or for substantial replacement of equipment, the expenditure is in the nature of capital expenditure. If it is to facilitate the carrying on of the business or for current repair, it is revenue. (per Empire Jute ¶ 14).

PLANNING NOTES

(i) Document each repair invoice with description and impact analysis (preservation vs. enhancement); cite Empire Jute for revenue characterisation. (ii) Insurance premium for plant / machinery / building IS deductible; insurance for goods-in-transit (stock) is also revenue. (iii) For leased premises, document the lessor's obligation under the lease deed to confirm deductibility falls in lessee's hands.

CROSS-REFERENCES

Section 33 — Depreciation (capital expenditure routes here).
Section 35 — Amounts not deductible.
Section 36 — Cash payment / disallowances.

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