Section 31 Income Tax Act 1961: Repairs and Insurance of Machinery, Plant and Furniture
Section 31 of the Income-tax Act, 1961 allowed a business or professional taxpayer to deduct qualifying current repairs to machinery, plant or furniture and insurance premiums paid against the risk of damage or destruction of those assets. From 1 April 2026, the corresponding rule is contained in Section 28 of the Income-tax Act, 2025.
Updated: 27 September 2026
What did Section 31 of the Income-tax Act, 1961 provide?
Section 31 dealt specifically with repairs and insurance of machinery, plant or furniture used for the purposes of a business or profession. It permitted deduction of current repair expenditure and qualifying insurance premiums. The provision did not permit capital expenditure to be claimed as current repairs.
Section 31 - Repairs and insurance of machinery, plant and furniture
In respect of repairs and insurance of machinery, plant or furniture used for the purposes of the business or profession, the following deductions shall be allowed:
(i) the amount paid on account of current repairs thereto;
(ii) the amount of any premium paid in respect of insurance against risk of damage or destruction thereof.
Explanation: The amount paid on account of current repairs does not include expenditure in the nature of capital expenditure.
Meaning of current repairs under Section 31
The expression "current repairs" concerns expenditure on repairing an existing business asset rather than expenditure of a capital nature. The statutory Explanation expressly excludes capital expenditure. Whether a particular expense is a repair or capital expenditure depends on the nature and effect of the work, not merely on the description used in an invoice or the amount spent.
Conditions for deduction under the old Section 31
- The asset must be machinery, plant or furniture.
- The asset must be used for the purposes of the business or profession.
- For repairs, the amount must relate to current repairs and must not be capital expenditure.
- For insurance, the premium must relate to insurance against the risk of damage or destruction of the relevant asset.
Current provision from 1 April 2026: Section 28 of the Income-tax Act, 2025
The Income-tax Act, 2025 consolidates the earlier rules on rent, rates, taxes, repairs and insurance in Section 28. For machinery, plant or furniture, Section 28(1)(a) covers a premium paid for insurance against risk of damage or destruction, while Section 28(1)(f) covers current repairs that are not capital expenditure.
Section 28(2) also expressly provides that where premises, building, machinery, plant or furniture is partly used, or is not wholly and exclusively used, for business or profession, the deduction is restricted to the fair proportionate part determined with regard to business or professional use.
| Subject | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| Current repairs to machinery, plant or furniture | Section 31(i), with Explanation excluding capital expenditure | Section 28(1)(f) |
| Insurance against damage or destruction | Section 31(ii) | Section 28(1)(a) |
| Partial or non-exclusive business use | Read with the applicable restriction provisions of the 1961 Act | Section 28(2) expressly restricts deduction to the fair proportionate business or professional use |
Section 29 of the 1961 Act and computation of business income
Under Section 29 of the Income-tax Act, 1961, income referred to in Section 28 was computed in accordance with Sections 30 to 43D. Section 31 formed part of that deduction framework for profits and gains of business or profession.
Practical distinction: repair expense and capital expenditure
A routine expense incurred to preserve, maintain or repair an existing business asset may fall within the current-repairs rule when the statutory conditions are met. Expenditure that is capital in nature is outside the current-repairs deduction. Capital expenditure may instead require consideration under the provisions governing the cost of the asset and depreciation, depending on the facts and the law applicable to the relevant tax period.
Which law should be checked?
For periods and proceedings governed by the Income-tax Act, 1961, Section 31 and the relevant saved provisions of that Act should be examined. For the regime effective from 1 April 2026, the corresponding deduction is found in Section 28 of the Income-tax Act, 2025. The applicable law should therefore be identified by reference to the tax period and the transition provisions.