Section 189 - Interpretation
Simple decode The chapter deliberately covers property advances even when the transfer fails. “Specified sum” is used for acceptance under section 185; “specified advance” is used for repayment under section 188. Labels such as token money, earnest money or booking amount do not control the result.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current law and effective date
Section 189 is controlled against 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 require the repeal-and-savings framework rather than automatic migration.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
Simple decode The chapter deliberately covers property advances even when the transfer fails. “Specified sum” is used for acceptance under section 185; “specified advance” is used for repayment under section 188. Labels such as token money, earnest money or booking amount do not control the result.
Who should use this section
Users of sections 185 and 188 who need the statutory meanings of banking company, co-operative bank, loan or deposit, specified advance and specified sum.
Old-law bridge
Definitions embedded in 1961 Act sections 269SS and 269T
The old-law bridge is navigational, not automatic precedent transfer. Match the 1961 Act wording, saved proceedings, current 2025 Act text and effective date before importing an older interpretation.
Finance Act 2026 / current-law note
No section-specific Finance Act, 2026 textual substitution is separately flagged for section 189; the consolidated post-Finance-Act-2026 text remains the controlling version and must be used instead of pre-1 April 2026 extracts.
Professional alert
Identify the economic link to immovable property. Do not rely on contract labels. Retain cancellation deeds and refund bank evidence.
Connected Income-tax Rules, 2026 and Forms
| Rule | Current control | Form |
|---|---|---|
| No provision-specific Rule/Form is directly prescribed for this section in the mapping used here. Apply the statute directly and check the current Rules where another provision cross-refers to them. | ||
Worked application
A buyer pays cash token money for a flat but cancels the deal. The receipt can be a specified sum under section 185 and its return can be a specified advance repayment under section 188.
Evidence / compliance checklist
- Identify the economic link to immovable property (section 189 evidence control 1).
- Do not rely on contract labels (section 189 evidence control 2).
- Retain cancellation deeds and refund bank evidence (section 189 evidence control 3).
Common mistake
A common section 189 error is to apply the old-law label or headline rate without rebuilding the current statutory conditions. For “Interpretation”, the safer control is to test the exact taxpayer/transaction facts, the operative tax year, every linked Rule/Form and the Finance Act 2026 consolidated wording. Identify the economic link to immovable property. Do not rely on contract labels. Retain cancellation deeds and refund bank evidence.
Recommended approach
For section 189, start with the legal trigger in “Interpretation”, document the evidence for that trigger, then run the computation or procedural step against the current text. As a cross-check, verify this provision-specific checkpoint: Simple decode The chapter deliberately covers property advances even when the transfer fails. “Specified sum” is used for acceptance under section 185; “specified advance” is used for repayment under section 188. Labels such as token money, earnest money or booking amount do not control the result.
Thresholds, periods and timing checkpoints
- Section 189 contains no standalone numeric checkpoint extracted for the register; apply its operative conditions from the current statutory text.
Related provisions and interaction map
Section 189 must be reconciled with the other sections 185-189 payment-mode restrictions/definitions, the associated penalty or prosecution provisions, and any prescribed electronic-mode rules.
Current statutory text
Primary-source trail
Statute: Income-tax Act, 2025 as amended by Finance Act, 2026
Rules: Income-tax Rules, 2026
Law navigation: Income Tax Department 2025 Act / Rules hub
Quoting note: Use the official consolidated Act for verbatim legislative language.
FAQs
Does an old Income-tax Act, 1961 case automatically decide section 189?
No. The old-law bridge helps research, but transferability depends on materially matching language, transition rules and any Finance Act 2026 change.
Which text should be quoted in advice or litigation?
Quote the consolidated official statute for the relevant tax year. If this page presents a provision summary rather than complete statutory text, use the official consolidated Act for verbatim legislative language.