Chapter XIII - Determination of Tax in Special Cases
Section 190
Section 190: relief where total income includes income on which no tax is payable
Section 190 opens Chapter XIII (Determination of Tax in Special Cases) with a fairness rule: if an assessee's total income includes some income on which no income-tax is actually payable under the Act, he gets a deduction from his tax bill equal to the tax that would otherwise fall on that income at his average rate.
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Need advice on Section 190?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Where there is included in the total income of an assessee any income on which no income-tax is payable under the provisions of this Act, the assessee shall be entitled to a deduction, from income-tax with which he is chargeable on his total income, of an amount equal to the income-tax calculated at the average rate of income-tax on the amount on which no income-tax is payable.
Introduction
This provision grants a deduction from income-tax, rather than a deduction from income. The amount is calculated by applying the average rate of income-tax to the portion included in total income on which no income-tax is payable under the Act.
Key takeaways
Condition
The total income must include an amount on which no income-tax is payable under the Act.
Tax calculation
The deduction from tax equals tax at the average rate on that amount.
How the relief works
Where an assessee's total income includes income on which no income-tax is payable under the Act, he is entitled to a deduction from the income-tax chargeable on his total income, of an amount equal to the income-tax calculated at the average rate of income-tax on the amount on which no income-tax is payable.
Check inclusion before computing relief
The qualifying amount must be included in total income. An amount that is specifically excluded from total income does not meet that condition merely because no tax is paid on it.
The calculation reduces income-tax by the average-rate amount. Removing the income first and applying slabs to a reduced balance is not a substitute for the Section 190 calculation. Keep total income, the tax on that income and the qualifying relief amount separate in the computation.
Official amended Act source
Practical checklist
Do
- Identify the amount actually included in total income on which no income-tax is payable under the Act.
- Calculate the statutory average-rate deduction from income-tax; do not replace it with tax on a reduced income balance.
Avoid
- Treat the entire total income as exempt because one component is non-taxable.
Illustrative example
Hypothetical calculation of the tax deduction
Hypothetical facts (illustration only, not a real taxpayer): Assume total income is ₹10,00,000, of which ₹2,00,000 is an amount included in total income on which the Act says no income-tax is payable. Assume income-tax calculated on the total income is ₹1,00,000. These figures are illustrative, not a statement of a tax slab or an actual assessment.
Find the average rate
₹1,00,000 divided by ₹10,00,000 gives an average income-tax rate of 10% under section 2(16).
Apply section 190
10% of the ₹2,00,000 qualifying amount is ₹20,000, deductible from the income-tax otherwise chargeable on total income.
Outcome
- The illustration leaves ₹80,000 after the section 190 deduction, before considering any other applicable adjustments. Verify that the ₹2,00,000 genuinely meets the section's condition.
Glossary
- Average rate of income-tax
- Income-tax calculated on total income divided by that total income, as defined in section 2(16).
Frequently asked questions
Is Section 190 a deduction from total income?
No. Its text provides a deduction from the income-tax chargeable on total income.
What relief does Section 190 give?
A deduction from the tax otherwise chargeable on total income, equal to the income-tax calculated at the assessee's average rate on the income included in total income on which no income-tax is payable under the provisions of this Act.
Need help applying this provision to your situation?
Get help computing your tax with our tax teamLast updated 10 October 2026