Section 80AB: Computation of Income for Chapter VI-A Deductions

Section 80AB of the Income-tax Act, 1961 established how eligible income must be calculated before allowing deductions under Part C of Chapter VI-A. The rule applies to periods governed by the 1961 Act; the Income-tax Act, 2025 has applied from 1 April 2026.

Meaning and purpose of Section 80AB

Section 80AB dealt with deductions for certain income included in an assessee's gross total income. Where a deduction was available under a section grouped under Part C - Deductions in respect of certain incomes of Chapter VI-A, the qualifying income had to be determined according to the Income-tax Act before any Chapter VI-A deduction was applied.

In practical terms, the deduction was based on eligible income computed under the tax law, rather than simply on gross receipts, turnover or an accounting figure that had not been adjusted as required by the Act.

Legal provision under the Income-tax Act, 1961

The substance of Section 80AB was that, notwithstanding the wording of an individual Part C deduction section, only the amount of the specified income computed in accordance with the Act before deductions under Chapter VI-A was deemed to be the relevant income derived or received and included in gross total income for calculating that deduction.

Read the official Section 80AB provision and the Income-tax Act, 1961 as amended by the Finance Act, 2025.

How the computation worked

1. Identify the particular income eligible for deduction under the relevant Part C section.
2. Compute that income according to the applicable provisions of the Income-tax Act, 1961, including relevant permissible expenses and adjustments.
3. Determine the qualifying amount included in gross total income before any Chapter VI-A deductions.
4. Apply the rate, percentage, ceiling and other requirements prescribed by the particular deduction section.
5. Check the additional Chapter VI-A restrictions, including Sections 80A and 80AC where applicable.

Illustrative calculation

Relationship with other provisions

Position under the Income-tax Act, 2025

The Income-tax Act, 2025 took effect on 1 April 2026. Tax Year 2026-27 and later years are governed by that Act, while earlier years and associated proceedings continue under the 1961 Act as provided by transitional rules. The 2025 legislation reorganised the deduction provisions and did not carry forward Section 80AB as a separately numbered equivalent in the official mapping.

For a current claim, identify the applicable deduction under the 2025 Act and read its computation requirements together with the general provisions, rather than automatically applying the old Section 80AB wording. Consult the Income Tax Department's 2025 Act guidance, transition FAQs and official section-mapping navigator (the navigator relates to the 2025 Bill and should be read with the enacted Act and amendments).

Frequently asked questions

Did Section 80AB itself grant a tax deduction?

No. It provided a rule for computing the income on which a deduction under an eligible Part C section was based. Eligibility and the deduction amount depended on that other section.

Was the deduction calculated on gross receipts?

Not merely on gross receipts. The qualifying income had to be computed in accordance with the applicable income-tax provisions before Chapter VI-A deductions.

Does Section 80AB apply to Tax Year 2026-27?

Not as a provision of the Income-tax Act, 2025. For Tax Year 2026-27 onward, use the new Act and its relevant deduction rules. Section 80AB remains relevant when dealing with periods governed by the 1961 Act.

Official references

• Income Tax Department - Section 80AB (1961 Act)
• Income Tax Department - Section 80A
• Income Tax Department - Deductions guidance
• Income Tax Department - Income-tax Act, 2025

Updated: 10 October 2026. This article is general information; the governing law and deductions depend on the relevant tax year and facts.