Income Tax Act, 2025  ·  Chapter XII — Tax on Special Incomes  ·  Section 194

Section 194
Tax on certain incomes

IT Act 2025 Chapter XII Effective 1 April 2026 Old: 115B
New Provision
Section 194, IT Act 2025
Replaces (IT Act 1961)
115B
Chapter
Chapter XII — Tax on Special Incomes
Effective From
1 April 2026
Statutory Text — Section 194

(1) Irrespective of anything contained in any other provision of this Act, where the total income of an assessee as mentioned in column B of the Table below, includes income of the nature specified in column C of the said Table, the income-tax payable by such assessee, for a tax year, shall be the aggregate of–– (a) income-tax calculated on income mentioned in column C, at the rate mentioned in column D, subject to the conditions specified in column E; and

(b) income-tax with which the assessee would have been chargeable had his total income been reduced by income mentioned in column C thereof. Table Sl. No. Assessee Income Rate Conditions of tax A B C D E 1. Any person. Winnings (other 30% Nil. than from any online game) from–– (a) lottery; or (b) crossword puzzle; or (c) race including horse race (not being income from the activity of owning and maintaining race horses); or (d) card game and other game of any sort; or (e) gambling or betting of any form or nature. 2. A person, Royalty in respect of a 10% (a) No deduction resident in patent developed and in respect of any India and registered in India. expenditure or who is a allowance shall be patentee allowed to the (herein eligible assessee referred to as under any provision an eligible of this Act in assessee). computing his income referred to in column C; (b) an option for taxation of income by way of royalty in respect of a patent developed and

Sl. No. Assessee Income Rate Conditions of tax A B C D E registered in India is exercised in the prescribed manner, on or before the due date specified under section 263(1) for furnishing the return of income for the relevant tax year; (c) where an option is exercised under clause (b) and the eligible assessee does not offer its income for taxation as per the provisions of columns C and D for any of the five tax years, succeeding such tax year, then such assessee shall not be eligible to claim the benefit of the provisions of columns C and D for five tax years subsequent to the tax year in which such income has not been offered to tax as per such provisions. 3. Any person. Income by way of 10% No deduction in transfer of carbon respect of any credits. expenditure or allowance shall be allowed to the assessee under any provision of this Act in computing his income referred to column C.

Sl. No. Assessee Income Rate Conditions of tax A B C D E 4. Any person. Any income from 30% (a) No deduction the transfer of any in respect of any virtual digital asset. expenditure (other than cost of acquisition, if any) or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing the income referred to in column C; and (b) no set off of loss from transfer of the virtual digital asset computed herein shall be allowed against income computed under any provision of this Act to the assessee and such loss shall not be allowed to be carried forward to succeeding tax years. 5. Any person. Any income by way 30% Nil. of net winnings from any online game, computed in the manner, as may be prescribed. 6. Any person. Any profits and 12.5% Nil. gains from life insurance business. (2) For the purposes of this section,–– (a) “carbon credit”, in respect of one unit, means reduction of one tonne of carbon dioxide emissions or emissions of its equivalent gases which is validated by the United Nations Framework on Climate Change and which can be traded in market at its prevailing market price;

Shahi & Co. — Our Understanding
This section is part of Chapter XII of the Income Tax Act, 2025, effective from 1 April 2026. It carries forward the corresponding provision from the Income Tax Act, 1961 with simplified language and restructured drafting.
Practical Note: For specific guidance on how this provision applies to your situation, consult a qualified Chartered Accountant. The Income Tax Act, 2025 retains the substance of the old law while making it more accessible.
Shahi & Co., Chartered Accountants
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Disclaimer: This is a reproduction of Section 194 of the Income Tax Act, 2025 (No. 30 of 2025) as published in the Official Gazette of India (CG-DL-E-22082025-265620) for informational and reference purposes only. Shahi & Co., Chartered Accountants makes no warranty as to completeness or accuracy. For the official authenticated text refer to egazette.gov.in or incometaxindia.gov.in. This does not constitute legal or tax advice.