Section 189: interpretation - definitions for Chapter XII

Introduction

Section 189 supplies the meanings used across Chapter XII, unless the context requires otherwise. The two property-transfer terms are deliberately distinct: 'specified sum' concerns an amount receivable, while 'specified advance' is money in the nature of an advance.

Key takeaways

Definitions

For the purposes of Chapter XII, unless the context otherwise requires:

• "banking company" means a company to which the provisions of the Banking Regulation Act, 1949 apply, and includes any bank or banking institution referred to in Section 51 of that Act;
• Section 189(b) refers the two agricultural credit institution terms to Section 150. The current amended Act places those definitions in Section 149(6); the printed cross-reference and the amendment need to be read together.
• "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place;
• "specified advance" means any sum of money in the nature of an advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place.

Current agricultural-credit definition cross-reference

The current Department consolidation still prints a Section 150 cross-reference in Section 189(b). Finance Act, 2026 inserted the relevant definitions in Section 149(6) and substituted Section 150 with a federal co-operative deduction. The quoted Section 189 wording is preserved; read the current definitions and amendment together when applying the provision.

When this provision applies

Identify the operative transaction rule before applying these definitions. A receipt connected with immovable property and a repayment of an advance can engage different provisions even though both concern the same proposed transaction.

Classify the amount by substance. “Specified sum” includes money receivable as an advance or otherwise in relation to the transfer, while “specified advance” concerns money in the nature of an advance, whatever it is called.

Limits and procedural safeguards

Cancellation of the proposed transfer does not by itself remove the statutory definitions: both expressly apply whether or not the transfer takes place.

The definitions do not themselves state every monetary threshold, aggregation rule, exception or permitted payment mode. After classification, apply the relevant Section 185 or 188 provisions and any other applicable transaction rule.

Step-by-step review

1. Identify whether the transaction is acceptance or receipt, or repayment.

2. Read the agreement and payment history to establish the link with immovable property and the nature of the amount.

3. Apply the appropriate defined term and institution definition where relevant.

4. Check the operative provision’s mode, threshold, aggregation and exception conditions before completing the transaction.

Hypothetical example

Hypothetical illustration: a proposed property transfer is cancelled and an amount received as an advance is to be repaid. Cancellation does not by itself remove the amount from “specified advance”. The repayment must still be tested under Section 188 rather than assuming the definitions cease to matter.

Records to prepare

The proposed transfer agreement and any cancellation document.

Receipts, repayment proposal and the amount’s actual nature.

The applicable operative-section analysis and payment-mode evidence.

Official amended Act source

• Income-tax Act, 2025 as amended by Finance Act, 2026: Section 189 and related provisions

Step-by-step flow for using the Section 189 definitions

1. 1

   Is the amount linked to transfer of an immovable property?

   • No: It is not a specified sum or specified advance; check whether it is a loan or deposit instead.
   • Yes: Go to the next step.
2. 2

   Is it being received or repaid?

   • Received: Any sum receivable, as advance or otherwise, is a specified sum (clause (c)); test the receipt under Section 185.
   • Repaid: A sum in the nature of an advance, by whatever name called, is a specified advance (clause (d)); test the repayment under Section 188.
3. 3

   Did the transfer actually take place?

   Both definitions apply whether or not the transfer takes place, so a cancelled deal does not take the amount outside them.

4. 4

   Is a bank or agricultural credit body involved?

   Use clause (a) for banking company and clause (b) for primary agricultural credit society and primary co-operative agricultural and rural development bank when applying the exceptions and thresholds in Sections 185 to 188.

Practical checklist

Glossary

Banking company

A company to which the Banking Regulation Act, 1949 applies; this includes a bank or banking institution referred to in Section 51 of that Act.

Primary agricultural credit society

Section 189(b) prints a cross-reference to Section 150; following Finance Act, 2026, the relevant definitions are now set out in Section 149(6). See the current cross-reference note in this guide.

Specified sum

Money receivable, as an advance or otherwise, in relation to transfer of immovable property, whether or not the transfer occurs.

Specified advance

Money in the nature of an advance, whatever its name, in relation to transfer of immovable property, whether or not the transfer occurs.

Transaction classification

Determining the amount’s legal nature and whether the operative rule concerns receipt or repayment.

Frequently asked questions