New Provision
Section 40, IT Act 2025
Replaces (IT Act 1961)
43C
Chapter
Chapter IV — Computation of Total Income
Effective From
1 April 2026
Statutory Text — Section 40
(1) For the purposes of computation of income under the head “Profits and gains of business or profession”, cost of acquisition of an asset which becomes property of–– (a) an amalgamated company under a scheme of amalgamation; or (b) an assessee, under a gift, or will, or an irrevocable trust, or on total or partial partition of a Hindu undivided family, when sold as stock-in-trade shall be the sum of—
(i) cost of acquisition of the said asset in the hands of the amalgamating company in case of clause (a), or the transferor or donor in case of clause (b); (ii) any cost of improvement made; (iii) any expenditure incurred by the amalgamating company or transferor or donor, as the case may be, wholly and exclusively in connection with such transfer. (2) This section shall not apply to an asset referred to in section 67(6).
Shahi & Co. — Our Understanding
This section falls under Chapter IV which governs the computation of total income under all five heads: Salaries, House Property, Business & Profession, Capital Gains, and Other Sources.
Practical Note: All income earned by a taxpayer in a tax year must be computed under one of these heads. Proper classification determines the applicable deductions, set-off rules, and tax rates.
Shahi & Co., Chartered Accountants
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Disclaimer: This is a reproduction of Section 40 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.