Section 52 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 52 spreads four kinds of expenditure over several tax years in equal instalments: costs of an amalgamation or demerger by an Indian company, payments under a voluntary retirement scheme, and the capital cost of spectrum and telecom licence fees. It also deals with what happens when a licence or spectrum is transferred. This article explains the seven sub-sections as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Under the Table in sub-section (1), amalgamation and demerger expenses of an Indian company, and voluntary retirement payments to an employee, are deducted in equal instalments over five tax years from the year of the event or payment. Spectrum fee and telecom licence fee (capital, and actually paid) are deducted over the years the spectrum or licence remains in force, from the later of the start of the business and the actual payment. A transfer of the licence or spectrum triggers the balance deduction or a charge under sub-section (2).
Where this section sits
Section 52 is the last of the amortisation sections in Part D of Chapter IV, after section 51 on mineral prospecting, in the article on section 51. The next articles begin with sections 53, 56 and 57. For rectification of an erroneous deduction, see our post on Section 287. A company planning a restructuring or a retirement scheme can speak to our tax planning advisory team about the timing of these deductions.
Section 52(1): the Table
Where expenditure of the nature in column B is incurred during the tax year, a deduction (or part) is allowed in equal instalments in each of the successive tax years in column D, beginning from the initial tax year in column C.
| Serial number | Nature of expenditure | Initial tax year | Number of tax years |
|---|---|---|---|
| 1 | Expenditure incurred by an Indian company, wholly and exclusively for the purposes of amalgamation or demerger of an undertaking | Tax year in which the amalgamation or demerger takes place | Five tax years |
| 2 | Amount paid to an employee in connection with his voluntary retirement as per any scheme of voluntary retirement | Tax year in which the payment is made | Five tax years |
| 3 | Capital expenditure incurred and actually paid for acquiring any right to use spectrum for telecommunication services (spectrum fee) | Tax year in which (a) the business to operate telecom services is commenced, or (b) the spectrum fee is actually paid, whichever is later | Years from the initial tax year up to the tax year to which the spectrum for which the fee is paid remains in force |
| 4 | Capital expenditure incurred and actually paid for acquiring any right to operate telecommunication services (licence fee) | Tax year in which (a) the business to operate telecom services is commenced, or (b) the licence fee is actually paid, whichever is later | Years from the initial tax year up to the tax year to which the licence for which the fee is paid remains in force |
"Equal instalments" is calculated by taking 1 as the numerator and the number of tax years in column D as the denominator (section 52(7)(b)). "Actually paid" means actual payment of the expenditure irrespective of the tax year in which the liability was incurred according to the accounting method regularly employed, or payable in such manner as may be prescribed (section 52(7)(a)).
Worked example: voluntary retirement payment
Sundar Mills Ltd (invented) pays Rs. 10,00,000 to an employee under a voluntary retirement scheme in the tax year commencing on 1 April 2026. Under serial number 2, the deduction is in five equal instalments of one-fifth each, beginning with that tax year: 10,00,000 / 5 = Rs. 2,00,000 a year for five tax years. Under sub-section (4)(b), no deduction is allowed for the same expenditure under any other provision.
Worked example: spectrum fee
Telenova Ltd (an invented company) commences its telecom business in the tax year commencing on 1 April 2026 and pays a capital spectrum fee of Rs. 20,00,00,000 in the same year. The spectrum remains in force up to the end of the tax year commencing on 1 April 2035. The initial tax year is the later of business commencement and actual payment, here 2026-27 (the tax year commencing on 1 April 2026), and the number of tax years is ten (from that year to the tax year commencing on 1 April 2035). Each instalment is 1/10 of Rs. 20,00,00,000 = Rs. 2,00,00,000.
Section 52(2): transfer of a licence or spectrum
For the licence or spectrum in serial number 3 or 4:
| Clause | Situation | Result |
|---|---|---|
| (a) | Transferred; capital proceeds are less than the expenditure incurred but remaining unallowed | A deduction equal to the unallowed expenditure reduced by the proceeds is allowed for the tax year of transfer |
| (b) | Transferred (whole or part); capital proceeds exceed the unallowed expenditure | The excess, up to the difference between the expenditure incurred to obtain the licence or spectrum and the unallowed amount, is chargeable as profits and gains of the business in the tax year of transfer |
| (c) | Transferred under (b) in a year in which the business no longer exists | Clause (b) applies as if the business were in existence |
| (d) | Transferred; proceeds equal or greater than the unallowed expenditure | No deduction for that expenditure in the year of transfer or later years |
| (e) | Sold or transferred by an amalgamating or demerged company to an amalgamated or resulting Indian company in a scheme | Clauses (a) to (d) do not apply to the transferor; the section continues for the transferee as if no transfer had taken place |
Worked example: transfer at a loss
Telenova's unallowed spectrum expenditure at the date of transfer is Rs. 14,00,00,000, and it transfers the spectrum for capital proceeds of Rs. 10,00,00,000. The proceeds are less than the unallowed amount, so under clause (a) a deduction of 14,00,00,000 minus 10,00,00,000 = Rs. 4,00,00,000 is allowed for the tax year of transfer.
Section 52(3): transfer of part
Where a part of the licence or spectrum is transferred in a tax year and sub-section (2)(b) and (c) does not apply, the deduction under sub-section (1) for the unallowed expenditure is found by (a) subtracting the capital proceeds from the unallowed expenditure and (b) dividing the remainder by the number of relevant tax years that have not expired at the beginning of the tax year of transfer.
Section 52(4): no double claim
No deduction is allowed:
- (a) for depreciation under section 33(1) to (10) in respect of the expenditure in serial number 3 or 4, where a deduction under section 52 is claimed and allowed for any tax year; and
- (b) under any other provision for the expenditure in serial number 1 or 2.
Section 52(5): failure to comply (serial number 3)
If a deduction has been claimed and granted for a spectrum fee (serial number 3) and the assessee later fails to comply with any provision of this section, then (a) the deduction is deemed to have been wrongly allowed; (b) the Assessing Officer may, irrespective of any other provision, recompute the total income for that tax year by rectification; (c) section 287 applies so far as may be; and (d) the four-year period in section 287(8) is counted from the end of the tax year in which the failure takes place.
Section 52(6) and (7)(c): business reorganisation and voluntary retirement
If a specified business reorganisation takes place before the five years in serial number 2 expire, the section continues to apply to the successor entity as it would have to the predecessor, and no deduction is allowed to the predecessor for the tax year of the reorganisation. A "specified business reorganisation" means (i) amalgamation of an Indian company and its undertaking with another Indian company; (ii) demerger of an undertaking of an Indian company to another company; (iii) succession of a firm or proprietorship concern to a company fulfilling the conditions in section 70(1)(zd); or (iv) conversion of a private or unlisted public company to a limited liability partnership fulfilling the conditions in section 70(1)(ze).
Need help with restructuring costs?
The five-year spread, the successor rules and the telecom transfer rules each change the numbers in a return. To plan a restructuring or a retirement scheme, see our tax planning advisory service.
Key takeaways
- Serial numbers 1 and 2 of the Table are deducted in five equal instalments from the year of the event or payment.
- Spectrum and licence fees (capital, actually paid) are spread over the years the spectrum or licence remains in force, from the later of business start and payment.
- Equal instalments are 1 divided by the number of tax years in column D.
- A transfer of the licence or spectrum gives a balance deduction, a charge on the excess, or no further deduction, depending on the proceeds.
- A voluntary retirement deduction passes to a successor in a specified business reorganisation.
- Depreciation under section 33(1) to (10) is not allowed on spectrum or licence expenditure once the section 52 deduction is allowed.
Read next
- Section 51: amortisation of expenditure for prospecting minerals and Schedule XII
- Sections 53, 56 and 57: stamp duty value for non-capital assets, interest of financial institutions and contract revenue
- Section 287: rectification
- Section 33: depreciation
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.