Deduction for Rent, Repairs & Insurance for Building & Machinery- Section 28 of Income Tax Bill, 2025

Where you are carrying own any business or profession, you are allowed to claim certain deductions while arriving at your taxable income. Section 28 of the Income Tax Bill, 2025 provides deduction in respect of buildings, machinery or furniture used for the purposes of business or profession. Following deductions are allowable as per section 28 of the Income Tax Bill, 2025.

Deductions allowed under Section 28

• Insurance Premium:

Deduction is allowable towards any insurance premium paid to cover risk of damage or destruction of the premises, building, plant & machinery & furniture used for the purpose of business or profession. This is a legitimate claim against the income of business or profession which helps in reducing the tax obligation.

• Land Revenue & Local Taxes:

If you have paid any land revenue, local rates or municipal taxes towards building or premises used for business or profession, these will be allowed as deduction while calculating taxable income of that tax year in which such payment has been made.

• Rent & Repairs paid as tenant:

If you have occupied any premises as a tenant for your business purposes, rent paid is allowed as a deduction while calculating income of business or profession. Further, if the tenant has incurred any expenditure towards repairs under rent agreement, it will also be deductible against the business income. However, if expenditure is of the nature of capital expenditure, the same shall not be deductible.

• Repairs incurred by owner:

If you are running business or profession in owned premises and incurs any repair expenditure of revenue nature, the same shall be allowed as deduction while calculating taxable income from business or profession in the income tax return.

Note: Following important points are note-worthy in respect of deductions eligible under section 28:

• Only Revenue expenditures (Current Repairs) are eligible for deduction, not capital expenditures. Capital expenditure means those expenditures incurred in respect of an asset which has an enduring benefit for the asset either increasing useful life of the asset or increasing monetary benefits from the asset.

• If any building, plant & machinery or furniture is partly used for the purposes of business or profession, the deduction for above expenses will be allowed in a proportionate manner having regard to the usage for the purposes of business or profession.

Judicial Decisions:

Ballimal Naval Kishore V. CIT (1997) 224 ITR 414 (SC)

The expression "Current repairs" means expenditure on buildings, machinery, plant or furniture which is not for the purpose of renewal or restoration but which is only for the purpose of preserving or maintaining an already existing asset and which does not bring a new asset into existence or does not give to the assessee a new or different advantage.

CIT V. Saravanna Spg Mills P. Ltd. (2007) 293 ITR 201(SC)

The deduction is admissible only for current repairs. The basic test is to find out whether expenditure was incurred to preserve and maintain an already existing asset and the expenditure must not be to bring a new asset into existence or to obtain new advantage. 

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