Section 41 → Section 44
Profits chargeable to tax
Quick Answer
Section 41 of the Income Tax Act, 1961 (Profits chargeable to tax) corresponds to Section 44 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 41
The starting point is Section 41 of the Income Tax Act, 1961 — profits chargeable to tax. Taxes deemed profits arising from the recovery of previously allowed deductions, or cessation of trading liabilities.
The new code maps this to Section 44: the provision is retained and renumbered as Section 44 of the Income-tax Act, 2025, applying from 1st April 2026. Retained. Unpaid creditors lingering in the balance sheet for more than 3 years without active dispute are flagged for deemed cessation taxation.
On the ground, changes to Section 41 carry a Medium impact. Prevents businesses from indefinitely keeping fake creditors.
Sec 41
Provision Summary
Taxes deemed profits arising from the recovery of previously allowed deductions, or cessation of trading liabilities.
Sec 44
Provision Summary
Retained. Unpaid creditors lingering in the balance sheet for more than 3 years without active dispute are flagged for deemed cessation taxation.
Key Changes & Highlights
- AI-driven balance sheet parsing detects stagnant liabilities for potential taxation under this section.
Related Articles from the Tax Academy
Frequently Asked Questions
What does Section 41 of the Income Tax Act 1961 deal with?
Section 41 of the Income Tax Act, 1961 covers profits chargeable to tax. Taxes deemed profits arising from the recovery of previously allowed deductions, or cessation of trading liabilities.
Where does Section 41 of the ITA 1961 go under the Income-tax Act, 2025?
Section 41 of the Income Tax Act, 1961 maps to Section 44 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Retained. Unpaid creditors lingering in the balance sheet for more than 3 years without active dispute are flagged for deemed cessation taxation.
Why does the change to Section 41 matter for taxpayers?
The transition impact for Section 41 is rated Medium. Prevents businesses from indefinitely keeping fake creditors.
What are the key changes to Section 41 under the Income-tax Act, 2025?
AI-driven balance sheet parsing detects stagnant liabilities for potential taxation under this section. These points are specific to Section 41 (Profits chargeable to tax).
Disclaimer: This mapping of Section 41 (Profits chargeable to tax) to Section 44 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 41 is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
Need professional help on Section 41?
Compare trusted providers — both offer CA services ready for the Income-tax Act, 2025.
*Affiliate links — we may earn a small commission at no extra cost to you. Disclosure.
Want to calculate tax on this section?