Section 55 → Section 73
Meaning of 'adjusted', 'cost of improvement' and 'cost of acquisition'
Quick Answer
Section 55 of the Income Tax Act, 1961 (Meaning of 'adjusted', 'cost of improvement' and 'cost of acquisition') corresponds to Section 73 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 55
In the 1961 statute, Section 55 deals with meaning of 'adjusted', 'cost of improvement' and 'cost of acquisition'. Defines what constitutes the cost of acquisition and improvement, specifically for intangible assets like goodwill or right to manufacture.
Under the Income-tax Act, 2025 (effective 1st April 2026), Section 55 is retained and renumbered as Section 73 of the Income-tax Act, 2025. Explicitly clarifies that the cost of acquisition and cost of improvement for internally generated goodwill of a business or profession will be taken as NIL.
The transition impact on Section 55 is assessed as High. Major impact on business valuations during sales.
Sec 55
Provision Summary
Defines what constitutes the cost of acquisition and improvement, specifically for intangible assets like goodwill or right to manufacture.
Sec 73
Provision Summary
Explicitly clarifies that the cost of acquisition and cost of improvement for internally generated goodwill of a business or profession will be taken as NIL.
Key Changes & Highlights
- Closes litigations regarding valuation of self-generated goodwill.
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Frequently Asked Questions
Which subject does Section 55 of the 1961 Act cover?
Section 55 of the Income Tax Act, 1961 covers meaning of 'adjusted', 'cost of improvement' and 'cost of acquisition'. Defines what constitutes the cost of acquisition and improvement, specifically for intangible assets like goodwill or right to manufacture.
What is the new section number for Section 55 under the Income-tax Act, 2025?
Section 55 of the Income Tax Act, 1961 maps to Section 73 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Explicitly clarifies that the cost of acquisition and cost of improvement for internally generated goodwill of a business or profession will be taken as NIL.
How does the Income-tax Act, 2025 affect Section 55 in practice?
The transition impact for Section 55 is rated High. Major impact on business valuations during sales.
What is new about Section 55 under the Income-tax Act, 2025?
Closes litigations regarding valuation of self-generated goodwill. These points are specific to Section 55 (Meaning of 'adjusted', 'cost of improvement' and 'cost of acquisition').
Disclaimer: This mapping of Section 55 (Meaning of 'adjusted', 'cost of improvement' and 'cost of acquisition') to Section 73 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 55 is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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