What expenses are disallowed as per income tax Act?

Expenditures disallowed for payment in cash

• Payment to banks, financial institutions, etc.
• Payment to government.
• Payment made by book adjustments.
• Payment for purchase of agricultural products.
• Payment made to cottage industries which are producing without the aid of power.

What is Disallowable expenditure?

Disallowable expenses are things that you pay for but cannot be claimed as a tax deduction. This is even though you may feel they were paid for as part of running your business.

What expenses can be disallowed if TDS is not deducted?

Earlier, the non-deduction or non-payment of TDS on payments made to residents results in disallowance only with respect to certain specified categories of payments (viz. interest, commission, brokerage, rent, royalty, fee for technical services or fee for professional services).

How many types of expenditure are there?

In accounting terminology, there are three types of expenditure that a business can incur: Capital Expenditure. Revenue Expenditure and. Deferred Revenue Expenditure.

Is depreciation a Disallowable expense?

As a general rule, depreciation is always disallowable. However, there may be cases where the account’s amortisation of intangible fixed assets (‘IFA’) may be allowed for tax purposes.

What are the expenses disallowed under the business Head?

Any expenditure exceeding Rs. 20,000, which is otherwise deductible under any provision of the Act, is disallowed (in full), if the payment of such an expenditure is made otherwise than by an account-payee cheque or an account-payee demand draft (i.e., by cash or bearer cheque or crossed cheque or bearer demand draft).

Which of the following expenditure is not allowed as deduction?

1. Expenditure which is an offence or prohibited by law not to be allowed as deduction [Section37(1)]: – any expenditure which an assessee incurred during previous year, such as for payment of hapta, freebies, donations, protection or extortion money will not be allowed as deduction.

What is Section 40 disallowance?

Disallowance of expenditure under section 40(a)(i) – The amount paid is interest, royalty, fees for technical services or any other sum (not being salary). The aforesaid amount is chargeable to tax in India in the hands of the recipient. The aforesaid amount is paid/payable to a non-resident.

Which expenditure is not deductible on payment basis as per Section 43B?

Section 43B disallows the sum which are not paid in the financial year as well as not paid before due date of filing income tax return. The following sum are allowed in the year in which they are incurred, only if they are paid before the due date of furnishing the return of income under section 139(1) of that year.

What are expenditure items?

An expenditure represents a payment with either cash or credit to purchase goods or services. It is recorded at a single point in time (the time of purchase), compared to an expense that is recorded in a period where it has been used up or expired.

Is depreciation an allowable expense?

Allowed Depreciation – Legal Structures In India, depreciation is an allowable expense according to the Income Tax Act, 1961, and it can be done using the diminishing balance method.

Is depreciation an allowable tax deduction?

Claiming a deduction for depreciation Generally, you can claim a deduction for the decline in value of depreciating assets each year over the effective life (unless you’re eligible to claim an immediate or accelerated deduction using a tax depreciation incentive).

What are the disallowed expenses under the head profit and gains of business or profession?

Any interest, commission or brokerage, rent, royalty, fees for professional services, fees for technical services, any amount payable to a resident contractor shall not be allowed as a deduction in the previous year in which the expenses are incurred, while computing the income chargeable under the head ‘Profit and …

Which of the following expenditure will be disallowed while calculating taxable income from business?

Following expenses are disallowed while calculating business income taxable under the head “profits and gains of business or profession”: Personal expenses – Section 37(1) Advertisement expenses incurred by advertising in souvenir, brochure, pamphlet etc of political parties – Section 37(2B).

When the amount of an expenditure claimed as deduction exceeds Rs 10000 /- and it is not made by account payee cheque draft?

Section 40A (3)(a) states that any expenditure incurred in respect of which the payment is made (exceeding ₹10,000 in a single day) should be done in demand draft/cheque and shall not be allowed as a deduction.

What is 40A 2 )( B of Income Tax Act?

It provides that where the assessee incurs any expenditure in respect of which payment is to be made to a specified person and the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard…

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