This move aims to tighten compliance and prevent taxpayers from gaining tax relief on expenses related to violations or defaults. The clarification follows instances of businesses attempting to treat such payments as legitimate business expenses.
| Photo Credit:
The income tax department on Thursday said taxpayers will not be allowed to claim deduction for expenditures incurred to settle proceedings initiated under four laws, including the Sebi and the Competition Act.
In a notification issued on April 23, the Central Board of Direct Taxes (CBDT) notified that any expenditure incurred to settle proceedings initiated in relation to contravention or defaults under the four specified laws shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.
The four laws are the Securities and Exchange Board of India Act, 1992; the Securities Contracts (Regulation) Act, 1956; the Depositories Act, 1996; And the Competition Act, 2002.
Published on April 24, 2025
About The Author
