Rent, Rates, Repairs & Insurance for Buildings — Section 30
# Section 30 — Building Used for Business or Profession
Section 30 governs deductions for building-related expenses when the building is used for business or profession (whether owned, rented, or held on lease).
## Items Covered and Their Treatment
Expense
Deduction Status
Rent paid for the building
Allowed
Rates (Municipal Tax / land revenue / local rates)
Allowed (on payment basis under Section 43B for local taxes)
Repairs — Capital Nature (substantial alterations, extension, structural reconstruction)
NOT Allowed — added to the cost of the building (depreciation route under Section 32)
Insurance Premium against risk of damage / destruction
Allowed
## Key Distinctions
### Owner vs Tenant
If the assessee is the owner — all the above are allowed (except capital repairs).
If the assessee is a tenant — only those repairs that the tenant has undertaken to bear under the rental agreement are allowed.
### Revenue vs Capital Repairs
The revenue/capital distinction is the most-tested point:
Revenue repairs preserve / restore the existing asset.
Capital repairs improve the asset, extend its useful life, or add to its capacity.
Worked example
### Example 1
Question: XYZ Ltd uses a building for its factory. During PY 2025-26 it incurred:
Rent paid (the company is a lessee): ₹3,00,000
Municipal tax paid: ₹40,000
Whitewashing & minor repairs: ₹25,000
Construction of an additional floor: ₹8,00,000
Insurance premium: ₹15,000
Compute deduction under Section 30.
Solution:
Rent ₹3,00,000 → Allowed
Municipal tax ₹40,000 → Allowed
Whitewashing ₹25,000 → Allowed (revenue repair)
Additional floor ₹8,00,000 → NOT allowed — capital expenditure; added to cost of building, eligible for depreciation
Insurance ₹15,000 → Allowed
Total deduction under Section 30 = ₹3,80,000
⚠️ Common exam mistakes
Treating construction of additional floors / structural improvements as revenue repairs.
A tenant claiming repair costs that he has not contractually agreed to bear.
Forgetting that capital repairs are not lost — they become part of the asset cost and yield depreciation.
Bare-Act text Section 30 · Income-tax Act, 1961 · click to expand
Section 30: 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.