Section 288 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 288(1) lists eleven situations in which the Assessing Officer may amend an order or recompute income for reasons that arise after the order is made. Each row has an action, a condition and a time from which the period runs. This article explains rows 1 to 5, as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026. Rows 6 to 11 and sub-section (2) are in our sibling article on serial numbers six to eleven and transfer pricing recomputation.
The Assessing Officer may carry out the actions in column B of the Table, subject to the conditions in column C, within four years (the period in section 287(8)), counted from the time in column D. The provisions of section 287 apply to such an amendment so far as may be. Rows 1 to 5 deal with a partner's or member's share, losses carried forward, capital gains of a transferor company, and capital gains relieved on reinvestment.
The frame: what section 288(1) says
The Assessing Officer may carry out the actions specified in column B of the Table, for the reasons mentioned there, subject to the conditions in column C, within four years referred to in section 287(8), reckoned from the time in column D. The provisions of section 287 shall, so far as may be, apply to such an amendment.
Section 287(8) is the general outer limit for an amendment: no amendment under that section, except as provided in section 288, is made after four years from the end of the financial year in which the order or intimation sought to be amended was passed. Section 288 uses the same four years, but the clock starts from the event in column D rather than from the date of the order. For the general rules of notice, hearing and refund that go with an amendment, read our article on section 287: rectification of mistake. If a demand follows an amendment, see section 289. Where a tax authority has amended your order, our legal dispute resolution team can help you check whether the four years and the stated condition are met.
The Table: serial numbers 1 to 5
| Serial number | Action (column B) | Condition (column C) | Time from which the four years run (column D) |
|---|---|---|---|
| 1 | Amend the assessment order of the partner of a firm, so as to adjust the partner's income to the amount not deductible under section 35(e) | Where remuneration to any partner determined in the completed assessment of the firm is subsequently found not deductible under section 35(e) in terms of (a) assessment or reassessment of the firm; (b) any reduction or enhancement of the firm's income under section 288, 287, 359, 363, 365, 368, 377 or 378; or (c) any order under section 245D(4) of the Income-tax Act, 1961 (43 of 1961) on the application made by the firm | From the end of the financial year in which the subsequent order was passed in the case of the firm |
| 2 | Amend the assessment order of the member of an association of persons or a body of individuals, so as to include the member's share in the assessment or the corrections of it | Where the share of the member in the income of the association or body determined in a completed assessment is subsequently found not included in the member's assessment or, if included, is not correct in terms of (a) assessment or reassessment of the association or body; (b) any reduction or enhancement made under section 288, 287, 359, 363, 365, 368, 377 or 378; or (c) any order under section 245D(4) of the Income-tax Act, 1961 on the application made by the association or body | From the end of the financial year in which the subsequent order was passed in the case of the association or body |
| 3 | Recompute the total income of the assessee for the succeeding year or years referred to in column C and make the necessary amendment consequent to proceedings initiated under section 279 for any tax year | Where there is recomputation of loss or depreciation for any tax year and, in consequence, the total income of the assessee for the succeeding year or years to which the loss or depreciation allowance has been carried forward and set off under section 111(1), 112(1), 113(2) or 115(1) is required to be recomputed | From the end of the financial year in which the order under section 279 was passed |
| 4 | Recompute the total income of the transferor company for the tax year referred to in column C and make the necessary amendment | Where in the assessment for any tax year (a) the capital gain arising from the transfer of a capital asset is not charged under section 67 in terms of section 70(1)(c) or (d); and (b) such gains are deemed under section 71(1) to be "Capital gains" of the tax year in which the transfer took place, at any time before the expiry of eight years from the date of transfer, by reason of (i) the capital asset being converted by the transferee company into, or treated by it as, stock-in-trade of its business; or (ii) the parent company or its nominees, or the holding company, ceasing to hold the whole of the share capital of the subsidiary company | From the end of the year (i) in which the capital asset was converted or treated as stock-in-trade; or (ii) in which the parent company or its nominees, or the holding company, ceased to hold the whole of the share capital of the subsidiary company |
| 5 | Amend the order of assessment so as to exclude the capital gain not chargeable to tax under any of the sections referred to in section 89 | Where in the assessment for any tax year a capital gain on transfer of the original asset referred to in section 89 is charged to tax and, within the period extended under that section, the assessee (a) acquires the new asset referred to in that section; or (b) deposits or invests such capital gain | From the end of the financial year in which the compensation was received by the assessee |
Printing note: in row 4 the copy consulted shows stray digits after "section 67" and after "71(1)"; they are footnote marks and are dropped. Rows 1 and 2 refer to section 245D(4) of the Income-tax Act, 1961; the Act prints that reference and this article adds nothing about it. Read that law for its meaning.
Row by row, in plain words
Row 1: the partner's order. If the remuneration given to a partner has been allowed in the firm's completed assessment but is later found not deductible under section 35(e), the partner's own assessment can be amended to adjust the partner's income. The later finding can come from the firm's assessment or reassessment, from an amendment or appellate-type order listed in clause (b), or from a settlement-type order referred to in clause (c).
Row 2: the member's order. The same logic for an association of persons or a body of individuals, where the member's share was left out of, or wrongly stated in, the member's assessment.
Row 3: carried-forward loss or depreciation. When an order under section 279 recomputes the loss or depreciation of a year, the later years to which that loss or depreciation was carried forward and set off under the sections named can have their total income recomputed. This row ties in with the reassessment provisions; see our article on section 279.
Row 4: transferor company. A capital gain that was not charged under section 67 by reason of section 70(1)(c) or (d) can become a charge in the year of transfer if, within eight years of the transfer, the transferee company converts the asset into stock-in-trade or treats it so, or the parent or holding company stops holding the whole of the share capital of the subsidiary. The Assessing Officer recomputes the transferor company's income for the year of transfer. Two clocks are given in column D, one for each trigger.
Row 5: relief on reinvestment. Where capital gain on transfer of the original asset referred to in section 89 was charged to tax, and within the period extended under that section the assessee buys the new asset or deposits or invests the gain, the order can be amended to remove the gain that is not chargeable. Column D starts the clock at the end of the financial year in which the compensation was received by the assessee.
A worked example
Names and amounts are assumed.
Row 1. Swaraj and Co., a firm, is assessed with Rs. 6,00,000 paid to partner Ritu Menon as remuneration allowed as a deduction. In a reassessment order passed on 10 November 2027, the remuneration is found not deductible under section 35(e) to that extent. The Assessing Officer may amend the assessment of Ritu to adjust her income by the amount not deductible. The financial year in which the subsequent order was passed ends on 31 March 2028, and the four years run from that date, to 31 March 2032. Section 287(4) and (5) then require notice, a reasonable opportunity of being heard and an order in writing before any amendment that increases her liability.
Row 3. A recomputation under section 279 reduces a business loss of tax year A by Rs. 2,00,000. The loss had been carried forward and set off in tax year B. The order under section 279 is passed on 15 July 2027, in a financial year ending 31 March 2028. The total income of year B can be recomputed by amendment up to 31 March 2032.
Need help with an amended order?
An amendment under section 288 can reach back to a year you thought was closed, because the clock starts from a later event. If you have received a notice of amendment, or want to check whether the condition in the Table is truly met, our team can help you read the order and the dates. See our legal dispute resolution service.
Key takeaways
- The Assessing Officer may take the Table actions for the stated reasons and on the stated conditions, within four years from the time in column D.
- The provisions of section 287 apply to such an amendment so far as may be.
- Rows 1 and 2 correct a partner's or member's assessment after the firm's or association's assessment changes.
- Row 3 follows a section 279 recomputation of loss or depreciation into the later years in which it was carried forward and set off.
- Row 4 reopens the transferor company's capital gain if within eight years the asset becomes stock-in-trade or the subsidiary ceases to be wholly held.
- Row 5 removes a capital gain from the order where the new asset is acquired, or the gain deposited or invested, within the extended period under section 89.
Read next
- Section 288, serial numbers six to eleven, and transfer pricing recomputation
- Section 287: rectification of mistake
- Section 289: notice of demand
- Sections 290 and 291: modification of notice and intimation of loss
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.