Deduction for Family Planning expenditure for Business or Profession- Section 32 of Income Tax Bill, 2025

Clause (i) of Section 32(1) of the Income Tax Bill, 2025 allows deduction towards family planning expenditure while computing the total income of business or profession for the purpose of Income tax return filing. The companies can take advantage of this deduction legitimately for reducing their income tax liability. Let’s have a discussion on this crucial provision.

According to the Section, the deduction for family planning expenditure is allowed only to the company assessees. Individual, HUF, LLP or partnership firms are not eligible to claim deduction for family planning expenditure incurred by them. Following are the important points to be considered in respect of this deduction:

• Deduction towards family planning expenditure shall be allowed to company assessees only.
• Deduction shall be allowed only in respect of expenditure incurred in respect of promoting family planning expenditure amongst their employees.
• Deduction shall be allowed in the year in which the expenditure is incurred and the expenditure is revenue in nature.
• If such expenditure is of capital nature, 1/5^th of it shall be allowed as deduction for the tax year in which it is incurred and the balance in the equal installments in the next four tax years.
• If the profits and gains of business or profession are less than the allowable deduction, deduction for family planning expenditure shall be allowed to the extent of profits available according to section 33(11). In this case, the claim for remaining expenditure shall be allowed to be set off and carried forward as if it is unabsorbed depreciation in lines with section 112(3).

When an asset acquired for family planning purposes is sold:

Sub-Clause (iii) of clause (i) Section 32(1) states that:

“the provisions of sections 38(1)(c), 39(4) (Table Sl. No. 9) and 45(6) shall apply to an asset representing capital expenditure for promoting family planning, to the extent they apply to an asset representing capital expenditure on scientific research;”

• If asset representing capital expenditure on family planning promotion is sold without having been used for other purposes:

The excess of (sales proceeds + deduction already allowed for family planning) over the amount of capital expenditure, or the amount of deduction made, whichever is less, shall be treated as business income in the tax year in which the asset is sold.

For example: Capital Asset acquired for family planning promotion: Rs. 100

Deduction claimed in 1^st Year: 20; Asset sold in 2^nd year at Rs. 95

Sales Proceeds + Deduction claimed = 95 + 20 = 115

Excess over expenditure made = 115 – 100 = 15

PGBP Income = 15 or 20 whichever is less i.e. Rs. 15

• If asset representing capital expenditure on family planning promotion is later used for business or profession purposes:

Actual cost for the asset for business or profession for the purposes of charging depreciation shall be taken as:

Actual cost of the asset as reduced by deduction allowed for the capital asset under section 32(1).

Disclaimer: The above information is meant for educational purposes only. Readers are requested to act diligently and under consultation with any professional before applying the information contained in this article. For any support mail at: support@taxwink.com