New Provision
Section 56, IT Act 2025
Replaces (IT Act 1961)
43D
Chapter
Chapter IV — Computation of Total Income
Effective From
1 April 2026
Statutory Text — Section 56
(1) Irrespective of anything to the contrary contained in this Act, the interest income in relation to bad or doubtful debts of a specified financial institution shall be chargeable to tax under the head “Profits and gains of business or profession” in the tax year in which such interest is—
(a) credited to the profit and loss account; or (b) actually received, whichever is earlier. (2) For the purposes of this section,–– (a) “specified financial institution” means–– (i) a public financial institution; or (ii) a scheduled bank; or (iii) a co-operative bank, other than–– (A) a primary agricultural credit society; or (B) a primary co-operative agricultural and rural development bank; or (iv) a State Financial Corporation; or (v) a State Industrial Investment Corporation; or (vi) any such class of non-banking financial companies, as may be notified by the Central Government; (b) “bad or doubtful debts” shall be such categories of debts, as may be prescribed, having regard to the guidelines issued in relation to such debts by the Reserve Bank of India.
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 56 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.