A repair ledger is not the deduction test
Section 28 of the Income-tax Act, 2025 addresses specified expenses for premises, machinery, plant or furniture used for business or profession. It distinguishes tenant premises from premises occupied otherwise than as tenant, excludes capital repairs and restricts mixed-use deductions to a fair proportionate part determined by the Assessing Officer having regard to business use. This guide applies to tax year 2026–27 under the Act as amended by Finance Act, 2026, checked on 26 October 2026. It does not calculate final tax or depreciation. Income Tax Department: Income-tax Act, 2025, sections 27–28, as amended by Finance Act, 2026.
Identify the asset and the legal occupancy
Under section 28(1)(c)–(f), rent for tenant-occupied premises is a distinct category. Repairs to tenant premises require the tenant to have undertaken the cost; repairs to other occupied premises and to machinery, plant or furniture carry the stated current-repair wording. Retain the lease and repair obligation instead of assuming that payment from the business bank account proves every condition. A landlord reimbursement or security-deposit adjustment needs its own reconciliation.
Separate restoration from capital expenditure
Record the work performed, the existing asset’s condition, the components changed and whether the project creates a new asset or capital improvement. A vendor’s label of maintenance does not settle the legal character. Conversely, a large amount alone does not supply a universal capitalisation threshold. Analyse the work and supporting evidence; this guide creates neither a monetary safe harbour nor a predetermined useful-life test. Capital items require separate consideration under applicable provisions rather than disappearing from the tax working.
Insurance and local taxes need their own schedules
Section 28(1)(a) covers premiums for insurance against damage or destruction of the stated business assets. Clause (b) covers land revenue, local rates or municipal taxes paid. Separate these from unrelated insurance products or general levies. Preserve the policy, covered asset, tax demand and payment evidence. Do not assume that any insurance or tax appearing in an expense ledger falls within these clauses.
A mixed-use percentage needs evidence
Section 28(2) applies where the stated asset is partly used, or not wholly and exclusively used, for business or profession. A floor-area, time-use or other basis should match the actual asset and usage; no one basis is universally prescribed here. Exclude capital items first and apply a supported fair allocation to the eligible pool. The percentages below are assumed to be accepted as fair on the stated facts, not statutory rates or binding self-certified allocations.
Reconcile the claim with the rest of the return
Prepare an asset-wise invoice schedule showing occupancy, repair obligation, revenue/capital conclusion, eligible expense and business share. Avoid claiming the same repair through both a separate deduction and another cost pool. Check separately applicable withholding, disallowance, payment and other computation provisions before filing. The examples isolate section 28 and assume those other requirements are satisfied; an arithmetic subtotal is not an unconditional entitlement.
Applicable primary references
Income Tax Department: Income-tax Act, 2025, sections 27–28, as amended by Finance Act, 2026
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Tenant’s documented repair obligation
A business tenant pays annual rent of ₹6,00,000 and ₹80,000 for eligible non-capital premises repairs it has undertaken under the lease. With exclusive business use and all other conditions assumed satisfied, the section 28 working totals ₹6,80,000. Keep the ₹80,000 obligation evidence with the invoices.
Illustrative example 2: Remove an identified capital component
A ₹3,00,000 contractor bill comprises ₹2,20,000 of assumed eligible current repairs and ₹80,000 of separately established capital improvement. The immediate section 28 repair pool is ₹2,20,000. Excluding ₹80,000 here does not determine its separate capital-allowance treatment.
Illustrative example 3: Accepted premises allocation
Eligible revenue expenses for mixed-use premises total ₹2,40,000. Assume a 75% business proportion is established and accepted as fair. The illustrative deduction is ₹1,80,000; ₹60,000 is excluded from this claim. Floor area alone would not establish that percentage for every business.
Illustrative example 4: Current machinery repair and private use
An eligible current-repair bill is ₹1,20,000 and accepted business use is 80%. The working is ₹96,000 deductible and ₹24,000 excluded, assuming the substantive repair classification and other conditions hold. The allocation cannot convert a capital replacement into current repairs.
Illustrative example 5: Insurance schedule by actual coverage
A policy bundle costs ₹50,000: ₹38,000 relates to qualifying damage/destruction cover for exclusively business assets and ₹12,000 to an unrelated personal policy. On these assumptions, ₹38,000 enters the section 28 insurance working. The bundle total is not automatically deductible under this clause.
Illustrative example 6: Correct a duplicate before filing
An otherwise eligible ₹90,000 repair appears in the repairs ledger and again in a ₹1,40,000 facilities total that includes it. Adding the ledgers gives ₹2,30,000; removing the ₹90,000 duplication leaves ₹1,40,000 of unique expenditure for further eligibility review.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the tax year | Applicable 2025 Act text and computation period. |
| 2 | List assets and business use | Premises, machinery, plant or furniture register. |
| 3 | Establish occupancy | Lease, ownership and occupation evidence. |
| 4 | Verify tenant repair obligation | Contractual undertaking and reimbursement terms. |
| 5 | Describe work actually performed | Invoices, scope, photographs or technical records. |
| 6 | Separate capital expenditure | Reasoned classification and separate capital schedule. |
| 7 | Map insurance and local taxes | Covered assets, policy details and actual payments. |
| 8 | Support mixed-use allocation | Asset-specific usage evidence and fair basis. |
| 9 | Remove overlaps and reimbursements | Ledger-to-invoice and claim reconciliation. |
| 10 | Complete other tax checks | Withholding, payment, disallowance and return consistency. |
Sixteen practitioner FAQs
1. Does an accounting label decide section 28 eligibility?
No. Identify the actual asset, expense and statutory conditions.
2. Which law does this article use?
The Income-tax Act, 2025 as amended by Finance Act, 2026, for tax year 2026–27.
3. Is rent for tenant premises separately recognised?
Yes, section 28(1)(c) addresses it.
4. What extra fact matters for tenant repairs?
The tenant must have undertaken to bear the repair cost under clause (e).
5. Are owner-occupied premises repairs treated with the same wording?
Clause (d) addresses current repairs where occupation is otherwise than as tenant, excluding capital expenditure.
6. Does machinery repair have a current-repair condition?
Yes, clause (f), also excluding capital expenditure.
7. Is there a universal rupee capitalisation threshold here?
No such threshold is supplied by this section’s wording.
8. Can a major invoice contain both revenue and capital work?
Yes. Establish and document the components rather than classifying only the total.
9. Does excluding capital work mean no other allowance is possible?
No. Assess its treatment separately under the relevant provisions.
10. Does every insurance policy qualify under clause (a)?
No. The clause concerns damage/destruction cover for the specified business assets.
11. Which local levies does clause (b) mention?
Land revenue, local rates and municipal taxes paid.
12. Is mixed use automatically disqualifying in full?
Subsection (2) restricts the claim to the fair proportionate business part.
13. Who determines that statutory fair proportion?
The Assessing Officer, having regard to business or professional use.
14. Is a fixed floor-area ratio always sufficient?
No. The evidence and allocation basis must fit actual usage.
15. Can the same invoice be claimed through two expense totals?
No. Remove duplicate economic expenditure.
16. Does the illustration subtotal settle all tax conditions?
No. Complete separately applicable withholding, disallowance and other computation checks.
Conclusion
Check the asset, occupancy and nature of each expense before claiming section 28 deductions; support any business-use allocation and exclude capital expenditure.