Section 47 · Computation of total income
Section 47 of the Income-tax Act, 2025 — Deduction for Expenditure on Agricultural Extension and Skill Development Projects
By CA Rajat Agrawal
Updated 04 Jul 2026
Chapter IV
📜 What the law says — Section 47, Income-tax Act 2025
47. (1) Any expenditure (excluding cost of any land or building) incurred, on—
(a) agricultural extension project by any assessee; or
(b) any skill development project by a company,
shall be allowed as a deduction, in the tax year in which such expenditure is incurred
provided such project is notified by the Board as per the guidelines issued by it.
(2) If a deduction under this section is claimed and allowed for any tax year in
respect of any expenditure referred to in sub-section (1), deduction shall not be
allowed for such expenditure under any other provision of this Act for the same or
any other tax year.
Tea development account, coffee development account and rubber
development account.
In plain language
What Section 47 is about
Section 47 of the Income-tax Act, 2025 gives businesses a deduction for money they spend on running a notified agricultural extension project or a notified skill development project. It is a business-and-profession incentive: the government encourages companies and other businesses to train farmers and to build the skills of the Indian workforce by letting them write off that spending against their taxable business income.
This single section merges two older provisions of the Income-tax Act, 1961 — Section 35CCC (agricultural extension) and Section 35CCD (skill development) — into one clean clause under the new 2025 Act, which takes effect from 1 April 2026 (tax year 2026-27).
Who can claim it
- Agricultural extension project [Section 47(1)(a)]: available to any assessee — company, partnership firm, LLP, or individual/HUF carrying on business.
- Skill development project [Section 47(1)(b)]: available only to a company. Non-corporate taxpayers cannot claim the skill-development leg.
What expenditure qualifies
- Revenue and capital spending on the notified project — for example training material, trainers' fees, field staff, farmer guidance camps, course delivery, equipment used for the project.
- The cost of any land or building is specifically excluded. You cannot claim the section on buying land or constructing a training building.
- The project must be notified by the Central Board of Direct Taxes (CBDT) in line with prescribed guidelines. Notification (not just intention to spend) is the trigger.
How much you get — the rate
The deduction is now 100% of the eligible expenditure, allowed in the tax year the expenditure is incurred. Historically these projects enjoyed a weighted deduction of 150% under the 1961 Act, but that enhanced rate was withdrawn from AY 2021-22. The 2025 Act carries forward the plain 100% deduction. So if you spend ₹40 lakh, you deduct ₹40 lakh (not ₹60 lakh).
Key conditions and how to claim
- Prior approval: An agricultural extension project generally needs approval of the Ministry of Agriculture and Farmers Welfare; a skill development project is typically undertaken in coordination with the National Skill Development Corporation (NSDC) or a notified institution.
- Minimum spend (agricultural extension): under the long-standing rules carried over, the project should involve expected expenditure of more than ₹25 lakh (excluding land/building) to qualify for notification.
- Apply before you start: the assessee applies to the CBDT (historically in Form No. 20 / Form 3C-O) with the approval letter, project note, cost estimate and completion date, before commencing the project.
Interaction with other sections — no double deduction
Section 47(2) makes it clear: if you claim and are allowed a deduction here, you cannot claim the same expenditure again under any other provision of the Act, in the same year or any other year. This blocks stacking Section 47 with, say, normal Section 28/37 business deductions or depreciation on the same spend.
Practical implications
- Large agri-input, seed, fertiliser, food-processing and FMCG companies use the agricultural-extension leg to fund farmer-training programmes and get a full write-off.
- Companies with CSR or workforce goals use the skill-development leg — but note a Section 47 claim is separate from CSR (CSR spend itself is generally not deductible).
- Keep the CBDT notification, Ministry/NSDC approval and separate project books; the deduction is verified against these.
💡 Example
Example 1 — Agricultural extension (any business): AgriGrow Seeds Pvt Ltd runs a CBDT-notified farmer-training programme in Rajasthan. During TY 2026-27 it spends ₹60 lakh on trainers, demonstration plots and guidance camps, plus ₹30 lakh to buy a plot of land for the centre. Under Section 47, only the ₹60 lakh (land excluded) is deductible at 100%. The company deducts ₹60 lakh from its business profits. It cannot also claim these amounts under Section 37 — that would be a prohibited double deduction.
Example 2 — Skill development (company only): SkillBridge Ltd, in coordination with the NSDC, spends ₹40 lakh on a notified skill-development project. As a company it qualifies under Section 47(1)(b) and deducts the full ₹40 lakh. Had SkillBridge been a partnership firm instead of a company, it would NOT have been eligible for the skill-development deduction, though it could still have claimed the agricultural-extension leg had it run such a project.
A relatable story: Meera runs a mid-size fertiliser business as a proprietor. She wanted to both train farmers and upskill her factory staff. Her CA explained that as an individual she could get her farmer-training project notified and claim 100% under Section 47(1)(a) — but the staff skill-development project would not qualify, because that leg is reserved for companies. Meera converted her workforce-training plan into a company-run initiative through her group company, so both projects could be claimed correctly.
| Feature | Agricultural Extension Project — Sec 47(1)(a) | Skill Development Project — Sec 47(1)(b) |
|---|
| Old 1961 Act section | Section 35CCC | Section 35CCD |
| Who can claim | Any assessee (all businesses) | Company only |
| Deduction rate | 100% of expenditure | 100% of expenditure |
| Earlier weighted rate | 150% up to AY 2020-21 | 150% up to AY 2020-21 |
| Land / building cost | Excluded | Excluded |
| Approval / coordination | Ministry of Agriculture & CBDT notification | NSDC / notified institution & CBDT notification |
| Double deduction elsewhere | Not allowed [Sec 47(2)] | Not allowed [Sec 47(2)] |
Related sections
1961 Act — Expenditure on agricultural extension project (predecessor) 1961 Act — Expenditure on skill development project (predecessor) General deduction for business expenditure not otherwise covered Deductions for depreciation on business assets Income chargeable under profits and gains of business or profession Expenditure on scientific research (related weighted-deduction incentive)
Frequently asked questions
Is the deduction under Section 47 100% or 150%?
It is 100% of the eligible expenditure. The enhanced weighted deduction of 150% that existed under the old Sections 35CCC/35CCD was withdrawn from AY 2021-22, and the 2025 Act carries forward only the plain 100% deduction.
Can an individual or partnership firm claim the skill development deduction?
No. The skill development project leg under Section 47(1)(b) is available only to a company. Non-corporate taxpayers can claim only the agricultural extension leg under Section 47(1)(a).
Can I claim the cost of land and building for the project?
No. Section 47 specifically excludes the cost of any land or building. Only the running and other project expenditure qualifies (you may claim depreciation on the building separately under normal rules, but not under Section 47).
Does the project need government approval?
Yes. The project must be notified by the CBDT under prescribed guidelines. Agricultural extension projects generally need Ministry of Agriculture approval, and skill development projects are undertaken in coordination with the NSDC or a notified institution.
Can I claim the same expense under Section 47 and also under Section 37?
No. Section 47(2) bars any double deduction. Once expenditure is allowed under Section 47, it cannot be claimed again under any other provision of the Act, in the same or any other year.
What replaced Sections 35CCC and 35CCD?
Section 47 of the Income-tax Act, 2025 consolidates both provisions into one section, effective from 1 April 2026 (tax year 2026-27).
Is there a minimum spending requirement?
For agricultural extension projects, the notification guidelines carried over from the earlier regime require expected project expenditure of more than ₹25 lakh (excluding land and building). Confirm the exact threshold in the current CBDT rules before applying.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 04 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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