§ 81
Chapter IV — Computation Of Total Income
Advance money received
Income-tax Act, 2025
When negotiating to transfer a capital asset, any advance money received must be considered when calculating the asset's cost. This amount should be deducted from the asset's cost, unless it has already been included in the assessee's total income under specific provisions. Key points to note include:
- deduction from cost of acquisition or written down value
- exclusion if already included in total income under certain sections
📜 Official text of the section +
81. Where any capital asset was, on any previous occasion, the subject of nego-
tiations for its transfer, any advance or other money received and retained by
the assessee in respect of such negotiations—
( a) shall be deducted from the cost for which the asset was acquired or
the written down value or the fair market value, as the case may be, in
computing the cost of acquisition;
( b) shall not be deducted from the said cost, where such advance or other
money has been included in the total income of the assessee for any
tax year as per the provisions of section 92(2)( h) of this Act or section
56(2)(ix) of the Income-tax Act, 1961 (43 of 1961).
Profit on sale of property used for residence.
Plain-language summary — not the official text. Refer to the bare Act and confirm with a professional for your specific case.