Section 14A → Section 14

Disallowance of expenditure incurred for exempt income

Section 14A of the old Income-tax Act, 1961 · new section 14 under the Income-tax Act, 2025

New reference Section 14

Income-tax Act, 1961Section 14A

No deduction for expenditure relating to exempt income
AO computes disallowance under Rule 8D if not satisfied
Applies even if no exempt income is earned in the year (Explanation, FA 2022)
Rule 8D: direct expenses + 1% of average exempt-income investments

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Section 14

Section 14(1): no deduction for expenditure related to income not forming part of total income
14(2): AO determines the amount by the prescribed method
14(3): applies even if no exempt income accrues in the year
Exempt incomes themselves are in section 11 read with Schedules II–VI

Applies from tax year 2026-27 (from 1 April 2026).

What changed

Renumbered into section 14; substance (including the 2022 'no exempt income' clarification) unchanged.

Practice notes

Disallowance cannot exceed the exempt income per many tribunal decisions — check whether the rules carry this limit.

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

What is section 14A in the new Income Tax Act?

Section 14 of the Income-tax Act, 2025, with the AO's computation method prescribed in the rules (old Rule 8D).

What changed in section 14A under the new Income Tax Act?

Renumbered into section 14; substance (including the 2022 'no exempt income' clarification) unchanged.

Is section 14A still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 14A of the 1961 Act. Section 14 of the 2025 Act applies from tax year 2026-27.

Related sections

1–15→1–15Definitions, previous year → tax year, charge, scope of income, deemed receipt, dividends, heads of income, 14A 37(1)→34General deduction for business expenditure; disallowance of illegal expenses and CSR 10(1), 10(16), 10(17A)…→Sch IIAgricultural income, scholarships, awards, superannuation and Agniveer payments — section 10 in Schedule II