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Section 47 Income Tax Act 2025: Which Agricultural Extension and Skill Development Expenses Are Deductible?

Section 47 permits a deduction for qualifying expenditure on notified agricultural extension projects and skill development projects, subject to statutory conditions. This guide explains who can claim the deduction, which costs are excluded, and how the rule operates.

Current law: The Income-tax Act, 2025 took effect on 1 April 2026. This explanation refers to Section 47 in the Act as amended by the Finance Act, 2026. Notification of the relevant project by the Board is a mandatory condition.

What does Section 47 provide?

Section 47(1) allows expenditure (other than the cost of land or a building) incurred on either (a) an agricultural extension project by any assessee or (b) a skill development project by a company to be deducted in the tax year of expenditure, provided the project is notified by the Board under its guidelines.

Section 47(2) prohibits a second deduction for the same expenditure under any other provision of the Act, whether in the same tax year or another tax year. The section does not itself prescribe a weighted or 150% deduction: its wording permits deduction of the qualifying expenditure.

Who can claim the deduction?

Agricultural extension project: An assessee of any category may qualify if it incurs expenditure on a project duly notified under the applicable Board guidelines.
Skill development project: The claimant must be a company, and the relevant project must be duly notified under the applicable guidelines.

A taxpayer should confirm the notification and its conditions before claiming the deduction. Simply describing a programme as agricultural outreach or employee training does not establish eligibility.

Relevant statutory terms and concepts

Assessee: A person liable to pay tax or another amount under the Act, including persons covered by the Act's statutory definition. Refer to Section 2 for the complete definition.
Company: The statutory category of company under Section 2 of the Act; eligibility for skill development expenditure is expressly restricted to companies.
Board: The Central Board of Direct Taxes (CBDT), as defined under the Act, which is responsible for the relevant guidelines and notification process.
Tax year: The period defined by the Income-tax Act, 2025 for which income is assessed. The deduction is tied to the tax year in which the qualifying expenditure is incurred.
Notified project: A project formally notified in accordance with the Board's applicable guidelines. Notification is a legal prerequisite, not merely supporting evidence.

Which expenditure is eligible and what is excluded?

  • Qualifying project expenditure may be deductible in the tax year incurred, subject to notification and other applicable requirements.
  • Cost of land or building is expressly excluded, even where acquired for the project.
  • The same expenditure cannot also be deducted as a general business expense or under another specific provision.
  • Costs outside the scope or conditions of the notified project should not be assumed to qualify.
Important distinction: The deduction under Section 47 concerns expenditure on qualifying notified projects. Ordinary training, promotional or agricultural-support spending may be governed by other provisions, but it is not automatically deductible under this section.

Practical examples

Example 1: Notified agricultural extension programme

An eligible assessee incurs Rs. 12,00,000 on activities within a duly notified agricultural extension project and Rs. 8,00,000 to buy land. Assuming the project conditions are met, the Rs. 12,00,000 may be deductible under Section 47; the Rs. 8,00,000 land cost is excluded.

Example 2: Company skill development programme

A company incurs Rs. 20,00,000 on a duly notified skill development project. Subject to compliance with the notification and applicable guidelines, it may claim Rs. 20,00,000 in the tax year of expenditure. It cannot claim that same amount again under another section.

Example 3: Project without notification

A partnership firm spends Rs. 5,00,000 on farmer training but has no qualifying notified agricultural extension project. Section 47 cannot be claimed solely because the activity benefits farmers. Any deduction under another provision requires separate examination.

Documents and checks before claiming

  • Identify the project notification and verify the applicable conditions and period.
  • Confirm that the claimant is eligible: any assessee for agricultural extension, a company for skill development.
  • Maintain invoices, ledgers, payment evidence and project-wise expenditure records.
  • Separate land and building costs from otherwise qualifying expenditure.
  • Review the applicable Income-tax Rules, 2026 and any reporting or certification obligations.
  • Check that no duplicate deduction has been claimed for the same expenditure.

Frequently asked questions

Can an individual claim Section 47 deduction?

An individual may qualify for expenditure on a notified agricultural extension project, subject to applicable conditions. The skill development limb is restricted to companies.

Is expenditure on buying land deductible?

No. Section 47 expressly excludes the cost of land and buildings.

Is prior or formal project notification important?

Yes. The project must be notified by the Board in accordance with its guidelines. The notification and applicable rules should be checked for the precise conditions and timing.

Can the same expenditure be claimed twice?

No. Section 47(2) prevents deduction of expenditure already allowed under Section 47 under any other provision, in the same or another tax year.

Which provisions of the earlier Act are comparable?

The subject matter broadly corresponds to Sections 35CCC and 35CCD of the Income-tax Act, 1961. Claims must nevertheless be assessed under the legislation applicable to the relevant period.

Official law and resources

Official Section 47Income-tax Act 2025 (official PDF)Act and Rules portal

Last updated: 10 November 2026. This article provides general statutory information; individual eligibility depends on the relevant notification, rules and facts.