Sections 13 and 14 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 13 sorts every income into one of five heads, and section 14 says that no deduction is allowed for expenditure incurred in relation to income that does not form part of total income. Together they open Chapter IV, which deals with the computation of total income. This article explains both, as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026. Every line of a return sits under one of these heads, which is how our income tax return filing work is organised.
Section 13: save as otherwise provided, all incomes are classified under five heads: Salaries; Income from house property; Profits and gains of business or profession; Capital gains; Income from other sources. Section 14: irrespective of anything to the contrary, no deduction is allowed for expenditure incurred in relation to income that does not form part of total income. Where the Assessing Officer is not satisfied with the claim, he determines the expenditure under a method as may be prescribed.
Section 13: heads of income
Section 13 reads: "Save as otherwise provided in this Act, all incomes shall, for the purposes of charge of income-tax and computation of total income, be classified under the following heads of income".
| Clause | Head of income | Where to read about it |
|---|---|---|
| (a) | Salaries | Sections 15 to 19 |
| (b) | Income from house property | Sections 20 to 25 |
| (c) | Profits and gains of business or profession | Sections 26 to 66 |
| (d) | Capital gains | Sections 67 to 91 |
| (e) | Income from other sources | Sections 92 to 95 |
The section-number guide in the right-hand column follows the layout of Chapter IV of the Act, where each head has its own Part. Our posts cover the individual sections: for salary, Section 15 on salary chargeable to tax; for business profits, Section 26 on business income. The whole Chapter is mapped in our chapter guide on the computation of total income.
Three points follow from the text.
- The classification covers all incomes. The words are "all incomes shall ... be classified under the following heads". Which head a particular receipt falls under is decided by the provisions on each head that follow.
- It serves two purposes: the charge of income-tax and the computation of total income. A head is therefore not only a label: computation rules, deductions and set-off are tied to the head.
- "Save as otherwise provided in this Act" means that another provision of the Act can classify an item differently or give it special treatment.
Section 14: expenditure on income that is not part of total income
Section 14(1): the bar
"Irrespective of anything to the contrary contained in this Act, for the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income."
Key features:
- The bar applies "irrespective of anything to the contrary" in the Act, so it overrides a deduction clause that would otherwise allow the expense.
- It covers expenditure "in relation to" the excluded income, which is wider than expenditure incurred "on" it.
- It applies when computing total income "under this Chapter", that is, Chapter IV.
- Income that does not form part of total income includes income left out under sections 11 and 12; see our article on sections 11 and 12.
Section 14(2): the Assessing Officer's power to determine the amount
Where the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with:
- (a) the correctness of the claim of expenditure incurred by the assessee; or
- (b) the claim made by the assessee that no expenditure has been incurred,
in relation to income that does not form part of the total income under the Act, he shall determine the amount of expenditure in accordance with any method as may be prescribed. The detail of the method is left to the Income-tax Rules, 2026; this article states none because section 14 prints none.
Section 14(3): the year of income and the year of expense
"Irrespective of anything to the contrary", the section applies where expenditure has been incurred during any tax year in relation to income which does not form part of the total income, but such income has not accrued or arisen or has not been received during that tax year. So the expense and the exempt income need not fall in the same tax year; the bar can operate in the year of the expense even when the exempt income comes in a later year.
| Sub-section | Rule | Practical effect |
|---|---|---|
| 14(1) | No deduction for expenditure in relation to income not forming part of total income | The expense is added back, so it cannot reduce taxable income |
| 14(2) | Assessing Officer, if not satisfied on the accounts, determines the expenditure by a prescribed method | The amount may be fixed by method, even if the claim is that nothing was spent |
| 14(3) | Applies although the excluded income has not accrued, arisen or been received in the tax year of the expense | The bar is not limited to the year the exempt income is earned |
Examples
An exempt receipt with shared costs. Asha (invented) has a salary and a receipt that is not included in total income because it is enumerated in a Schedule and the conditions are satisfied. She incurs travel and office costs partly in earning that receipt. Section 14(1) says no deduction is allowed for expenditure incurred in relation to the receipt that is not part of total income.
Claim of no expenditure. Bright Fields Society (an invented body) earns an income that does not form part of its total income and says that it has spent nothing in earning it. If the Assessing Officer, having regard to the accounts, is not satisfied with that claim, section 14(2)(b) lets him determine the expenditure in accordance with the method as may be prescribed. The text prints no percentage or amount.
Expense now, income later. Imran (invented) spends on a project in the tax year commencing on 1 April 2026, but the exempt income from it will arrive only in the tax year commencing on 1 April 2027. Section 14(3) applies the bar to the expense in the first year even though the income has not yet accrued, arisen or been received in that year.
Need help with classifying your income and expenses?
Putting each receipt under the right head, and keeping expenses tied to the right income, is the base of an accurate return. If you want a review before you file, see our income tax return filing service.
Key takeaways
- Section 13 classifies all incomes under five heads, save as otherwise provided.
- The five heads are Salaries; Income from house property; Profits and gains of business or profession; Capital gains; Income from other sources.
- Section 14(1) bars any deduction for expenditure incurred in relation to income that does not form part of total income.
- Section 14(2) lets the Assessing Officer determine the expenditure by a prescribed method if he is not satisfied on the accounts.
- Section 14(3) applies the bar even if the excluded income has not yet accrued, arisen or been received in the tax year of the expense.
- The method under section 14(2) is left to the Income-tax Rules, 2026.
Read next
- Sections 11 and 12: incomes not included in total income
- Sections 27, 28 and 30: computing business profits, rent, repairs and insurance
- Section 15: salary chargeable to tax
- Chapter IV: computation of total income
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.