Think about any business running from a rented shop or owned office — they spend money on rent, repairs, taxes, and insurance for that building. Section 30 is the provision that allows these expenses as a deduction from business income. Simple rule: if the premises is used for your business or profession, the related building costs come off your profit.
Here's how it splits based on who you are:
If you're a tenant (renting the premises): You can claim (a) the rent paid, and (b) if your lease agreement specifically puts the repair obligation on you, then the cost of repairs you actually paid. The key condition for repairs: your lease must say you bear it. If the landlord bears repairs, you can't claim them — even if you end up paying.
If you own the premises (or occupy it other than as a tenant): No rent deduction obviously — you don't pay rent to yourself. But you can claim current repairs to the premises. Note the word current — this means day-to-day maintenance, not structural improvements or additions.
For everyone: You can also deduct (b) land revenue, local rates, and municipal taxes paid on the property, and (c) insurance premiums paid to cover damage or destruction of the building.
The most important restriction, reinforced by the Explanation: capital expenditure is never deductible under Section 30. If Mr. Sharma adds a new floor to his factory or installs a permanent partition, that's capital in nature — it goes to the balance sheet, not the P&L. Only revenue repairs (painting, fixing a leaking roof, replacing broken tiles) qualify. This distinction — current/revenue repairs vs. capital expenditure — is the single most exam-tested concept from this section. This 4-mark question appears in almost every attempt.
📊 Worked example
Example 1 — Tenant running a CA firm
Ms. Iyer runs a CA practice from a rented office in Chennai. During FY 2024-25, she paid:
- Monthly rent: ₹25,000 × 12 = ₹3,00,000
- Repairs to office (her lease says she bears repairs): ₹40,000
- Municipal taxes paid by her to the corporation: ₹18,000
- Insurance premium for office building: ₹12,000
- New air-conditioning unit fixed to wall (capital item): ₹80,000
Working:
| Item | Amount | Allowed? |
|---|---|---|
| Rent | ₹3,00,000 | ✅ Yes — tenant, rent paid |
| Repairs | ₹40,000 | ✅ Yes — lease obligation on her |
| Municipal taxes | ₹18,000 | ✅ Yes — Sec 30(b) |
| Insurance | ₹12,000 | ✅ Yes — Sec 30(c) |
| AC unit | ₹80,000 | ❌ No — capital expenditure |
Total deduction under Section 30 = ₹3,00,000 + ₹40,000 + ₹18,000 + ₹12,000 = ₹3,70,000
---
Example 2 — Owner-occupied business premises
Rajesh & Co. Pvt. Ltd. owns its factory building. Expenses during the year:
- Current repairs (whitewashing, plumbing fixes): ₹95,000
- Extension of factory shed (new construction): ₹4,50,000
- Fire insurance premium: ₹30,000
- Property tax to local authority: ₹22,000
Working:
- Current repairs ₹95,000 — ✅ Allowed (revenue in nature)
- Extension ₹4,50,000 — ❌ Not allowed (capital expenditure; will be depreciated under Sec 32)
- Fire insurance ₹30,000 — ✅ Allowed
- Property tax ₹22,000 — ✅ Allowed
Total deduction under Section 30 = ₹95,000 + ₹30,000 + ₹22,000 = ₹1,47,000
⚠️ Common exam mistakes
- Don't claim repairs when you're a tenant and the lease puts repair cost on the landlord. Repairs are allowed to a tenant only if the lease agreement specifically makes it the tenant's obligation. If it's silent or the landlord's job, no deduction.
- Don't confuse 'current repairs' with capital improvements. Students often deduct renovation or extension costs under Section 30. The Explanation explicitly bars capital expenditure — only day-to-day maintenance qualifies. Capital works go to Section 32 (depreciation).
- Don't claim rent if you own the building. If the assessee owns the premises, there's no rent deduction. Some students try to claim a notional rent — that doesn't exist under Sec 30.
- Don't forget municipal taxes and insurance — easy marks. Students focus only on rent and repairs, and miss the straightforward deductions under clauses (b) and (c). In a 4-mark question, these two lines can be worth a mark each.
- Don't apply Section 30 to residential premises. The premises must be used for business or profession*. If the building is partly residential, only the portion used for business qualifies.
📖 Bare Act text — Section 30, Income Tax Act 1961
(click to expand)
In respect of rent, rates, taxes, repairs and insurance for premises, used for the purposes of the business or profession, the following deductions shall be allowed—
(a) where the premises are occupied by the assessee—
(i) as a tenant, the rent paid for such premises; and further if he has undertaken to bear the cost of repairs to the premises, the amount paid on account of such repairs;
(ii) otherwise than as a tenant, the amount paid by him on account of current repairs to the premises;
(b) any sums paid on account of land revenue, local rates or municipal taxes;
(c) the amount of any premium paid in respect of insurance against risk of damage or destruction of the premises.
Explanation.—For the removal of doubts, it is hereby declared that the amount paid on account of the cost of repairs referred to in sub-clause (i), and the amount paid on account of current repairs referred to in sub-clause (ii), of clause (a), shall not include any expenditure in the nature of capital expenditure.
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