Section 28 of the Income-tax Act, 2025 — Rent, Rates, Taxes, Repairs and Insurance for Business Premises, Plant, Machinery and Furniture

In plain language

What Section 28 actually says

Section 28 of the Income-tax Act, 2025 (effective 1 April 2026) allows a business or professional to deduct the everyday running costs of the premises, machinery, plant and furniture used to earn income. It is one of the first "specific deduction" provisions in the Profits and Gains of Business or Profession (PGBP) chapter. The new Act has merged three old provisions into one: Section 30 (buildings), Section 31 (plant, machinery, furniture) and Section 38 (proportionate/partly-used assets) of the Income-tax Act, 1961 now all sit inside Section 28. The intent was simplification, not a change in tax treatment.

Which expenses are deductible

• Rent — the rent paid where the premises are occupied by the assessee as a tenant.
• Current repairs to premises (owner-occupied) — amounts spent on current repairs where the premises are occupied otherwise than as a tenant (i.e. you own it), provided the spend is not capital in nature.
• Repairs by a tenant who has agreed to bear them — where you are a tenant and the lease requires you to bear repair costs, the cost of repairs (again, not capital) is deductible.
• Current repairs to machinery, plant or furniture — non-capital repair spend to keep these assets working.
• Land revenue, local rates and municipal taxes — such statutory charges paid on the business premises.
• Insurance premium — premium paid to insure the premises, plant, machinery or furniture against the risk of damage or destruction.

Who it applies to

It applies to anyone computing income under the head "Profits and gains of business or profession" — sole proprietors, firms, LLPs, companies, and professionals such as CAs, doctors, lawyers and consultants. It does not matter whether you own the property or rent it; Section 28 has a rule for each situation. It does not cover residential house property let out for rent — that falls under the House Property head (Section 20 onwards in the 2025 Act), not PGBP.

The most important condition — "current repairs", not capital

• Only current repairs qualify. The test the courts have long applied is whether the spend merely preserves and maintains an existing asset, or whether it brings a new asset / enduring advantage into existence.
• Capital expenditure is expressly excluded from repairs. Building a new floor, replacing an entire machine, or a major renovation is capital — you cannot claim it here. Instead you add it to the block of assets and claim depreciation under Section 33 (the 2025 Act's depreciation section).
• Whitewashing, replacing broken tiles, servicing machinery, fixing wiring and similar upkeep are typically current repairs and are fully deductible in the year paid.

Partly-used assets — the proportionate rule

Section 28(2) carries forward the old Section 38 principle: if a building, machine or piece of furniture is used partly for business and partly for other (e.g. personal) purposes, only the fair proportionate part of these expenses is deductible, as determined having regard to the extent of business use. So if you run a shop from part of your home, you deduct only the business share of rent, rates, repairs and insurance.

How it interacts with other sections

• Depreciation (Section 33, formerly 32) — repairs go here; capital replacement goes to depreciation.
• General deduction (Section 34, formerly 37) — expenses not specifically covered by Section 28 but incurred wholly for business may still be claimed under the residuary Section 34.
• TDS rules — rent above the prescribed threshold attracts TDS under Section 194-I; failure to deduct can trigger disallowance under Section 37(1) of the 2025 Act (formerly Section 40(a)(ia)). Note: municipal taxes, rates and insurance are outside 194-I.
• Cash payment cap — payments above ₹10,000 in cash (₹35,000 for transporters) can be disallowed under the 2025 Act's counterpart to Section 40A(3).

Practical implications

• Keep the paperwork: rent agreement, rent receipts, municipal tax challans, repair invoices and insurance policies. The Assessing Officer can ask you to justify that repairs were current, not capital, and that the asset is used for business.
• Owner vs tenant matters: an owner claims "current repairs"; a tenant claims rent, and repairs only if the lease obliges the tenant to bear them.
• No standard deduction here — unlike house property (which has a 30% standard deduction), business premises get only the actual expenses listed above.