Section 107 - Charge of tax
Section 107 is the bridge to the special-rate provision. Section 195 currently applies a base rate of 30% to income under sections 102-106 and prohibits deductions, allowances and set-off of losses against that income. Applicable surcharge and health and education cess are additional, depending on the assessee and the Finance Act.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current-law control
This page uses the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026. Earlier years and saved proceedings remain subject to the repeal-and-savings framework.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
Section 107 is the bridge to the special-rate provision. Section 195 currently applies a base rate of 30% to income under sections 102-106 and prohibits deductions, allowances and set-off of losses against that income. Applicable surcharge and health and education cess are additional, depending on the assessee and the Finance Act.
Who should use this section
Any assessee whose books, investments, assets, expenditure or specified negotiable-instrument transaction can trigger the unexplained-income code in sections 102-107 This applicability note is specific to section 107.
Old-law bridge
1961 Act New link; old rate provision was Section 115BBE
The bridge is navigational only. A 1961 Act case or rule is carried forward only after checking wording, transition provisions and the current 2025 Act text.
Finance Act 2026/current-text control
The connected special-rate provision in section 195 was amended by Finance Act, 2026; keep the section 107 charging bridge separate from the rate computation.
Professional alert
Professional alert Finance Act, 2026 substituted 30% for 60% in section 195(1)(i) from 1 April 2026. The connected penalty architecture also changed: assessed section 195(1)(b) income is now a specified misreporting case under section 439(11)(g), while section 443 stands omitted.
Connected Income-tax Rules, 2026 and Forms
No provision-specific Rule/Form is independently mapped in this tranche. General return, procedure and evidence rules can still apply.
Worked application
An assessee has normal taxable income of ₹20 lakh and section 104 income of ₹10 lakh. The ₹10 lakh is separated for section 195 treatment at the statutory base rate, while tax on the balance is computed under the otherwise applicable provisions. A business loss cannot be set off against the ₹10 lakh.
Evidence / compliance checklist
- Maintain a separate computation of income falling under sections 102-106 (section 107: Charge of tax).
- Preserve the assessment/return working that shows the special-rate base and the exclusion of deductions/set-off (section 107: Charge of tax).
- Reconcile surcharge and cess under the applicable Finance Act for the assessee category (section 107: Charge of tax).
Common mistake
Netting ordinary business losses or deductions against unexplained income before applying the special-rate provision.
Recommended approach
For section 107, fix the governing tax year, identify the operative sub-section for “Charge of tax”, trace every amount to evidence, apply only verified Rule/Form links, and retain a computation that another reviewer can reproduce from the primary source.
Thresholds, periods and timing checkpoints
No standalone numeric threshold is extracted from the section text; apply the operative conditions and linked provisions.
Judicial / interpretive bridge
No section-specific Supreme Court bridge is included for section 107 unless text-equivalence with the 2025 Act has been checked. Legacy cases should not be transplanted into section 107 merely because the subject is similar.
Related provisions
Current statutory text
Primary-source trail
FAQs
What does section 107 of the Income-tax Act, 2025 cover?
Section 107 covers charge of tax. The operative result depends on the exact statutory conditions shown on this page and applies from 1 April 2026, subject to transition/savings provisions.
Who should check section 107?
Any assessee whose books, investments, assets, expenditure or specified negotiable-instrument transaction can trigger the unexplained-income code in sections 102-107 This applicability note is specific to section 107.
Are there specific Rules or Forms for section 107?
No provision-specific Rule/Form independently mapped in this tranche.