Income-tax Act, 2025 | Section 122
Section 122 - Deductions to be made in computing total income
This is the gateway for the entire Chapter. Deductions come after computing gross total income, cannot exceed gross total income, cannot be duplicated, and profit-linked deductions require a timely return and an actual claim in that return. Inter-unit transfers must be tested at market value or arm's-length price where applicable.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Section 122: operativeEffective 1 April 2026Tax Year 2026-27 onwardLegally reviewed 8 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
This is the gateway for the entire Chapter. Deductions come after computing gross total income, cannot exceed gross total income, cannot be duplicated, and profit-linked deductions require a timely return and an actual claim in that return. Inter-unit transfers must be tested at market value or arm's-length price where applicable.
Who should use this section
Every assessee claiming a Chapter VIII deduction; this is the gateway and anti-duplication provision This applicability note is specific to section 122.
Old-law bridge
1961 Act sections 80A, 80AB, 80AC and 80B
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.
Professional alert
Exception / professional alert For Part C deductions, missing the section 263(1) due date or omitting the claim from the return can defeat the deduction even where commercial eligibility exists.
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 undertaking earns ₹40 lakh and claims a ₹40 lakh profit-linked deduction. The same profit cannot be deducted again under another provision, and the total Chapter VIII deduction cannot create a negative total income.
Evidence / compliance checklist
- For section 122, retain the transaction and computation documents that prove each statutory condition.
- Reconcile the claim to the return and primary-source text for the relevant tax year (section 122: Deductions to be made in computing total income).
- Preserve any linked Rule/Form evidence and approval or certificate required by the provision (section 122: Deductions to be made in computing total income).
Common mistake
Assuming an otherwise eligible deduction can exceed gross total income, be claimed twice, or survive failure of a mandatory return/claim condition.
Recommended approach
For section 122, fix the governing tax year, identify the operative sub-section for “Deductions to be made in computing total income”, 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
- allowed as a deduction under those provisions for any tax year,—
- not be allowed under any other provision of this Act for such tax year;
- tax year, no deduction shall be allowed for such specified business under section
- 46 for the same or any other tax year.
Judicial / interpretive bridge
No section-specific Supreme Court bridge is included for section 122 unless text-equivalence with the 2025 Act has been checked. Legacy cases should not be transplanted into section 122 merely because the subject is similar.
Current statutory text
122. (1) In computing the total income of an assessee, the deductions specified in
this Chapter shall be allowed from his gross total income, as per and subject
to the provisions of this Chapter.
(2) The aggregate amount of the deductions under this Chapter shall not, in any
case, exceed the gross total income of the assessee.
(3) If the deduction under section 133 or 135 or 137 or 138 or 141 or 142 or 143 is
admissible in computing the total income of an association of persons or a body of
individuals, no deduction under the same section shall be made in relation to the
share of income of a member of such association of persons or body of individuals
in computing the total income of such member.
(4) Irrespective of anything to the contrary contained in any of the provisions of
Part C of this Chapter, where, in the case of an assessee, any amount of profits and
gains of an undertaking or unit or enterprise or eligible business is claimed and
allowed as a deduction under those provisions for any tax year,—
(a) deduction in respect of, and to the extent of, such profits and gains shall
not be allowed under any other provision of this Act for such tax year;
and
(b) shall in no case exceed the profits and gains of such undertaking or unit
or enterprise or eligible business, as the case may be.
(5) Deduction under the provisions of Part C of this Chapter shall not be allowed
to an assessee, who fails to—
(a) furnish a return of income on or before the due date specified under
section 263(1); or
(b) make a claim of deduction in a return furnished under section 263(1).
(6) For the purposes of any deduction under this Chapter, irrespective of anything
to the contrary contained in Part C of this Chapter, if any goods or services held
for the purposes of—
(a) the undertaking, unit, enterprise or eligible business carried on by the
assessee are transferred to any other business carried on by the assessee;
or
(b) any other business carried on by the assessee are transferred to the
undertaking or unit or enterprise or eligible business of the assessee,
and the consideration, if any, for such transfer as recorded in the accounts of the
undertaking or unit or enterprise or eligible business does not correspond to the
market value of such goods or services as on the date of transfer, then the profits
and gains of such undertaking or unit or enterprise or eligible business carried on
by the assessee shall be computed as if the transfer, in clause (a) or (b), had been
made at the market value of such goods or services as on that date.
(7) For the purposes of sub-section (6), “market value”,—
(a) in relation to any goods or services sold or supplied, means the price that
such goods or services would fetch if these were sold by the undertaking
or unit or enterprise or eligible business in the open market, subject to
statutory or regulatory restrictions, if any;
(b) in relation to any goods or services acquired, means the price that such
goods or services would cost if these were acquired by the undertaking
or unit or enterprise or eligible business from the open market, subject
to statutory or regulatory restrictions, if any; and
(c) in relation to any goods or services sold, supplied or acquired, means the
arm’s length price of such goods or services as defined in section 173(a),
if it is a specified domestic transaction referred to in section 164.
(8) Where a deduction under Part C of this Chapter, is claimed and allowed in
respect of profits of a specified business as referred to in section 46(11)(d) for any
tax year, no deduction shall be allowed for such specified business under section
46 for the same or any other tax year.
(9) Where any deduction is required to be made or allowed under Part C of this
Chapter, in respect of any income of the nature specified in that section and included
in the gross total income of the assessee, then, irrespective of anything contained
in that section, for the purpose of computing the deduction under that section,
the amount of income of that nature as computed under the provisions of this Act
(before making any deduction under this Chapter) shall alone be deemed to be the
amount of income of that nature which is derived or received by the assessee and
which is included in his gross total income.
(10) For the purposes of this Chapter, the expression “gross total income” means the
total income computed as per the provisions of this Act, before making deduction
under this Chapter.
B.—Deductions in respect of certain payments
FAQs
What does section 122 of the Income-tax Act, 2025 cover?
Section 122 covers deductions to be made in computing total income. 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 122?
Every assessee claiming a Chapter VIII deduction; this is the gateway and anti-duplication provision This applicability note is specific to section 122.
Are there specific Rules or Forms for section 122?
No provision-specific Rule/Form independently mapped in this tranche.