Notification No. 631E-

What it does

Under section 295 of the Income-tax Act, 1961, the Central Board of Direct Taxes makes the Income-tax (Eighth Amendment) Rules, 2001, substituting rule 4 of the Income-tax Rules, 1962. The substituted rule 4 provides that, for the purposes of the Explanation below sub-section (1) of section 23, the amount of rent which the owner cannot realise shall be equal to the rent payable but not paid by a tenant and proved to be lost and irrecoverable, where four conditions are met: the tenancy is bona fide; the defaulting tenant has vacated or steps have been taken to compel him to vacate the property; the defaulting tenant is not in occupation of any other property of the assessee; and the assessee has taken all reasonable steps to institute legal proceedings for recovery of the unpaid rent or satisfies the Assessing Officer that legal proceedings would be useless.

Who it reaches

owners of let out house property claiming a deduction for unrealised rent
tenants in default whose occupation of other property of the assessee is material
assessing officers testing a claim of unrealised rent

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.295	s.533

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

Notification No. S.O. 631(E), dated 2nd July, 2001.

In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (Eighth Amendment) Rules, 2001.

(2) They shall come into force on the 1st day of April, 2002, and shall, accordingly, apply to the assessment year 2002-2003 and subsequent years.

2. In the Income-tax Rules, 1962, for rule 4, the following shall be substituted, namely:--

"4. Unrealised rent.--For the purposes of the Explanation below sub-section (1) of section 23, the amount of rent which the owner cannot realise shall be equal to the amount of rent payable but not paid by a tenant of the assessee and so proved to be lost and irrecoverable where,--

(a) the tenancy is bona fide

(b) the defaulting tenant has vacated, or steps have been taken to compel him to vacate the property;

(c) the defaulting tenant is not in occupation of any other property of the assessee;

(d) the assessee has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or satisfies the Assessing Officer that legal proceedings would be useless.".

[Notification No. 198/2001/F. No. 142/38/2001-TPL]

What it changes

The rule numbers are the 1962 Rules’ own, as the notification names them. The right-hand column is the department’s own mapping into the Income-tax Rules, 2026, which renumbered nearly everything.

Rule of the 1962 Rules	Now, in the 2026 Rules
Rule 4	rule 21

From when

1 April 2002, applying to assessment year 2002-03 and subsequent years.

What to watch

The rules come into force on 1 April 2002 and accordingly apply to assessment year 2002-03 and subsequent years.
All four conditions in clauses (a) to (d) must be satisfied; failure on any one defeats the claim.
The assessee may be excused from instituting legal proceedings only by satisfying the Assessing Officer that they would be useless.
A defaulting tenant who occupies any other property of the assessee takes the case outside the rule.

Where you meet it

In the computation of income from house property in the return, and in an assessment where the deduction for unrealised rent is examined.

What it names

Rules it names. Rule 4 of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 54/2026 [F. No. 370142/15/2026-TPL] / G.S.R. 240(E) — Ministry of Finance 31 March 2026
Notification No. 52/2026 [F.No. 370142/13/2026-TPL] / G.S.R. 233(E) — (Central Board of Direct Taxes) 30 March 2026
Notification No. 141/2025 [F. No. 370142/30/2025-TPL] / G.S.R. 598(E) — Ministry of Finance 1 September 2025
Notification No. 136/2025 [F. No. 370142/29/2025-TPL] / G.S.R 566(E) — Ministry of Finance 21 August 2025
Notification No. 133/2025 [F. No. 370142/27/2025-TPL] / G.S.R 555(E) — Ministry of Finance 18 August 2025
Notification No. 132/2025 [F. No. 370142/34/2025-TPL] / G.S.R. 553(E) — Ministry of Finance 14 August 2025

← Notification No. 632E- · Notification No. 630E- →

What a notification is. A notification is made under a power the Act itself gives, and within that power it is law — unlike a circular, which only binds the department. Its reach is the reach of the enabling provision and no wider, and the date it carries decides from when it works.

Source: the Income Tax Department’s own published text — its page for this instrument.

What this is