Section 142 Income Tax Act 2025: Can Housing Projects Claim Tax Deduction?
Section 142 preserves deductions for eligible housing and rental housing projects that would have qualified under Section 80-IBA of the Income-tax Act, 1961. Find out which projects can continue claiming the benefit, how the amount is computed and which conditions remain relevant.
What does Section 142 of the Income-tax Act, 2025 provide?
Section 142, under Chapter VIII relating to deductions in computing total income, concerns profits and gains from housing projects. It allows an assessee to continue a qualifying deduction for profits from developing and building housing projects or rental housing projects covered by Section 80-IBA of the Income-tax Act, 1961.
The provision applies where the assessee would have been eligible under Section 80-IBA for the relevant tax year had the 1961 Act remained in force. The deduction under the 2025 Act is calculated under that earlier section and is limited to the tax years that would have qualified under it.
Who can claim a housing project deduction under Section 142?
- The assessee's gross total income must include profits and gains derived from developing and building a housing project or rental housing project referred to in former Section 80-IBA.
- The assessee must be entitled to the deduction for the relevant tax year under the conditions of former Section 80-IBA, assuming the 1961 Act had not been repealed.
Meeting only the first condition is insufficient. The original approval, completion, project specifications, and other category-specific requirements under Section 80-IBA must also be examined.
How much deduction is allowed and for which years?
Section 142 expressly requires that the amount of deduction be calculated in accordance with Section 80-IBA of the 1961 Act. Under the relevant former provision, the deduction was generally equal to 100% of eligible profits and gains, subject to its detailed statutory conditions and restrictions. This is not a blanket exemption for all real-estate income.
Unlike a fixed ten-year or five-year deduction regime, Section 80-IBA was structured around qualifying projects and the relevant profits, approvals, and completion conditions. Section 142 allows a claim only for tax years that would have been eligible under the former provision; it does not restart or extend an otherwise expired entitlement.
| Question | Rule under Section 142 |
|---|---|
| What business is covered? | Developing and building qualifying housing projects or rental housing projects referred to in Section 80-IBA. |
| How is the amount computed? | Using the applicable rules of former Section 80-IBA, including conditions affecting eligible profits. |
| Is the benefit automatic? | No. All applicable conditions of former Section 80-IBA must still be satisfied. |
| Can the deduction continue after repeal? | Yes, for tax years that would have qualified if the 1961 Act had continued. |
| Does Section 142 create a new approval window? | No. It preserves qualifying claims; it does not independently open new project eligibility. |
Relevant statutory definitions and expressions
Housing project
A project qualifying under the rental housing provisions of Section 80-IBA, including applicable notification or approval requirements. It is not enough merely to rent out residential property.
Gross total income
The tax year is the period used under the 2025 Act for computing taxable income. For Section 142, eligibility must be checked for that particular tax year against the conditions of former Section 80-IBA.
Eligible profits and gains
It preserves the deduction calculated under former Section 80-IBA, which generally provided a 100% deduction of eligible project profits when all statutory conditions were met. It does not cover every housing project automatically.
Can rental housing projects claim Section 142?
No. Section 142 expressly preserves qualifying claims for tax years that would have been eligible under Section 80-IBA if the earlier Act had not been repealed.
Is Section 142 of the 2025 Act the same as Section 142 of the 1961 Act?
A claim must be supported by the documents and conditions required under the applicable Section 80-IBA rules. Missing approvals or completion evidence may jeopardise eligibility.
Official statutory sources
- Income Tax Department - Income-tax Act, 2025
- Income Tax Department - FAQs on continuation of deductions under Section 142
- Income Tax Department - statutory provisions and historical Section 80-IBA materials
Updated: 10 November 2026. This article is general legal information. Check the governing statutory text, amendments and project-specific conditions before making a claim.