CBDT Bars Tax Deduction on Settlement Payments
Why in the news
CBDT barred companies from claiming tax deductions on money spent settling cases or paying penalties under four financial and competition laws.
Key facts
- From 23 April, such fines, penalties and settlement sums cannot be subtracted while arriving at taxable income.
- Issued using Section 37 (Income Tax Act, 1961), the clause on business expenditure.
Laws covered
| Law | Year |
|---|---|
| Competition Act | 2002 |
| SEBI Act | 1992 |
| Depositories Act | 1996 |
| Securities Contracts (Regulation) Act | 1956 |
Government stance
- Violations now bring dual consequences: fines and higher taxes.
- Abhishek Rastogi of Rastogi Chambers said it signals a firm stance on non-compliance.
Exam angle
- Authority: CBDT; provision: Section 37.
- Four laws: SEBI Act, SCRA, Depositories Act, Competition Act.