COMPUTATION OF TOTAL INCOMECentral

Section 47 of Income Tax Act 2025

Expenditure on agricultural extension project and skill development project

(1)Any expenditure (excluding cost of any land or building) incurred, on—
1. (a)agricultural extension project by any assessee; or
2. (b)any skill development project by a company,

shall be allowed as a deduction, in the tax year in which such expenditure is incurred provided such project is notified by the Board as per the guidelines issued by it.

(2)If a deduction under this section is claimed and allowed for any tax year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed for such expenditure under any other provision of this Act for the same or any other tax year.

Summary

Taxpayers (referred to in the law as an assessee, which means any person who has to pay tax) can claim a tax deduction for business spending on an approved agricultural extension project or a skill development project.
For agricultural extension projects, any taxpayer is eligible to claim the deduction.
For skill development projects, only a company is eligible to claim the deduction.
The cost of buying or constructing any land or building is completely excluded and cannot be deducted.
To qualify, the project must be officially notified (meaning publicly declared and approved) by the Board (the central tax authority) according to the guidelines it issues.
If you claim and get this deduction, you cannot claim the same expenditure under any other part of this tax law for the same year or any other tax year.

Practical examples

1Ramesh, an individual organic farmer, spends Rs. 50,000 on June 12, 2026, to conduct an agricultural extension program in his village. Since the program is notified by the tax board according to its guidelines, and Ramesh is an individual taxpayer, he can deduct the entire Rs. 50,000 from his business income for that tax year, excluding any costs spent on land or buildings.

2Zenith Electronics Limited, an Indian company, spends Rs. 10,00,000 on October 15, 2026, to run a certified skill development project. Since the taxpayer is a company, it can deduct the entire Rs. 10,00,000 in computing its business profits for that tax year. If Zenith also spent Rs. 15,00,000 to construct a training center building for this project, that Rs. 15,00,000 is not allowed as a deduction under this section.

FAQ

1. Who is allowed to claim a tax deduction for an agricultural extension project under this section?

Any taxpayer who incurs expenditure on a notified agricultural extension project can claim the deduction.

2. Can an individual taxpayer claim a tax deduction for a skill development project under this section?

No, the deduction for a skill development project is only available to a company.

3. Does the deduction cover the cost of purchasing land or constructing a building for the project?

No, the cost of any land or building is completely excluded from the deduction.

4. Who must notify the project for it to qualify for a deduction?

The project must be notified by the Board as per the guidelines issued by it.

5. If a deduction is allowed under this section, can it be claimed under another section of this law?

No, once the deduction is claimed and allowed under this section, no deduction shall be allowed for that expenditure under any other provision of this Act for the same or any other tax year.

Test yourself

1.Under Section 47, which of the following is completely excluded from the eligible expenditure for an agricultural extension or skill development project?

2.Who is eligible to claim a deduction for a skill development project under Section 47?

3.When is the deduction under Section 47 allowed to be claimed?

4.What is the restriction regarding claiming a deduction under Section 47 and other provisions of the Act?

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COMPUTATION OF TOTAL INCOMECentral

Section 47 of Income Tax Act 2025

Expenditure on agricultural extension project and skill development project

(1)Any expenditure (excluding cost of any land or building) incurred, on—
1. (a)agricultural extension project by any assessee; or
2. (b)any skill development project by a company,

shall be allowed as a deduction, in the tax year in which such expenditure is incurred provided such project is notified by the Board as per the guidelines issued by it.

(2)If a deduction under this section is claimed and allowed for any tax year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed for such expenditure under any other provision of this Act for the same or any other tax year.

Summary

Taxpayers (referred to in the law as an assessee, which means any person who has to pay tax) can claim a tax deduction for business spending on an approved agricultural extension project or a skill development project.
For agricultural extension projects, any taxpayer is eligible to claim the deduction.
For skill development projects, only a company is eligible to claim the deduction.
The cost of buying or constructing any land or building is completely excluded and cannot be deducted.
To qualify, the project must be officially notified (meaning publicly declared and approved) by the Board (the central tax authority) according to the guidelines it issues.
If you claim and get this deduction, you cannot claim the same expenditure under any other part of this tax law for the same year or any other tax year.