Sub-section (1) allows six deductions in respect of premises, machinery, plant or furniture used for the business or profession: insurance premium against risk of damage or destruction (clause (a)); land revenue, local rates or municipal taxes paid (clause (b)); rent paid, when the premises are occupied as a tenant (clause (c)); current repairs to the premises, not being capital expenditure, when occupied otherwise than as a tenant (clause (d)); cost of repairs, not being capital expenditure, when occupied as a tenant who has undertaken to bear that cost (clause (e)); and current repairs to machinery, plant or furniture, not being capital expenditure (clause (f)).
Sub-section (2) restricts all of it where the asset is partly used, or not wholly and exclusively used, for the business or profession: the deduction is confined to the fair proportionate part as determined by the Assessing Officer.
Why it is there
It puts the recurring running costs of business premises and equipment on an express footing. The drafting separates an owner-occupier from a tenant because a tenant who has contracted to bear repairs is spending on another's asset, and the section allows that only where the obligation was undertaken. The capital-expenditure exclusion keeps improvement out of a repairs deduction, and sub-section (2) stops a full deduction on a partly used asset.
Who it applies to
An assessee carrying on a business or profession who owns or occupies premises used for it
An assessee occupying business premises as a tenant and paying rent
A tenant who has undertaken to bear the cost of repairs to the premises he occupies
An assessee owning machinery, plant or furniture used for the business or profession
The Assessing Officer, who determines the fair proportionate part under sub-section (2)
What this means in practice
Which repairs clause applies depends on how you hold the premises, and the two are not the same width: an occupier who is not a tenant gets only "current repairs" under clause (d), while a tenant who has undertaken to bear the cost gets "cost of repairs" under clause (e), which is not so confined. Machinery, plant and furniture are back to current repairs under clause (f). In all three, expenditure in the nature of capital expenditure is outside the clause, so an improvement is not rescued by calling it a repair. Rent under clause (c) is allowable only to a tenant, and on a mixed-use asset sub-section (2) cuts every one of these deductions to a proportion fixed by the Assessing Officer.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
A firm occupies a floor as a tenant at Rs. 6 lakh a year, having undertaken by its lease to bear repairs. In the year it pays that rent, Rs. 40,000 of fire insurance premium on its plant, Rs. 50,000 of municipal taxes and Rs. 3 lakh on repairs to the floor, of which Rs. 1 lakh adds a new mezzanine. Rent, premium, taxes and Rs. 2 lakh of repairs fall under clauses (c), (a), (b) and (e); the Rs. 1 lakh mezzanine is capital expenditure and is outside clause (e). If a quarter of the floor is the partners' residence, sub-section (2) confines all of these to the fair proportionate part determined by the Assessing Officer.
Where you meet this section
This section lives inside the profit and loss working for a business or profession rather than in any separate form. You meet it directly when an Assessing Officer disallows a repair as capital expenditure, or restricts rent, taxes or repairs to a proportion under sub-section (2).
The words themselves
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
Section 28(1)(e), Income-tax Act, 2025.
the deduction allowable under sub-section (1) shall be restricted to the fair proportionate part thereof as determined by the Assessing Officer
Section 28(2), Income-tax Act, 2025.
What people get wrong
Claiming "cost of repairs" as an owner-occupier. Clause (e) is available only to a tenant who has undertaken to bear the cost; clause (d) limits an occupier otherwise than as a tenant to current repairs.
Claiming rent as an owner. Clause (c) allows rent paid only when the premises are occupied as a tenant.
Treating a large or one-off repair as automatically allowable. Clauses (d), (e) and (f) each exclude expenditure in the nature of capital expenditure.
Claiming full repairs on partly used premises. Sub-section (2) restricts the deduction to the fair proportionate part.
Claiming machinery repairs under the wider tenant clause. Clause (f) confines machinery, plant and furniture to current repairs.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
30 - Rent, rates, taxes, repairs and insurance for buildings
31 - Repairs and insurance of machinery, plant and furniture
38 - Building, etc., partly used for business, etc., or not exclusively so used
A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.
Circular No. 10/2012, dated 31-12-2012 — Section 132, read with section 132A of the income-tax Act, 1961 - search & seizure - Assessment of preceding years in search cases 2012-12-31
Circular No. 05/2012 — Inadmissibility of expenses incurred in providing freebees to Medical Practitioner by pharmaceutical and allied health sector Indu 2012-08-01
Circular No. 392 — Section 6 l Exclusion of Assets/debts Outside INDIA 1984-08-24
Circular No. 287 — 307. Bonus - Whether it would be permissible for employers to claim deduction of bonus paid in excess of amount worked out as per 1980-12-04
A notification is made under a power the Act gives and, within that power, is law. These too were made under the 1961 Act and are placed here by the department’s concordance.
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 28. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
Ballimal Naval Kishore v CITSupreme CourtHelps departmenttagged s.30 I spent heavily doing up my premises and plant. Is that 'current repairs', or has the AO rightly called it capital?
Explainers
Fitting out premises you do not owntagged s.30 I am a tenant and I have spent on partitions, flooring, wiring and a false ceiling. Do I depreciate it, or deduct it?
When a repair bill stops being a repairtagged s.30 How do I tell whether what I spent on my premises or plant is deductible as repairs or has to be capitalised?
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.