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deduction of indirect taxes

Harshini (Meerpet) (43 Points)

22 July 2018

Is deduction allowed for the payment of indirect taxes under income tax act.?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (195703 Points)
Replied 22 July 2018

Yes..

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Harshini (Meerpet) (43 Points)
Replied 23 July 2018

can u pls state the provision for that sir, im little confused about that.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (195703 Points)
Replied 23 July 2018

Allowable Deductions [Section-37(1)]

The followings are some of the examples of expenses allowable as deduction u/s 37

1. All expenses and payments made for purchasing of raw materials, manufacture and sale of goods.

2. All expenses in the nature of advertisement to push up sales.

3. VAT/ST and expenses incurred in relation to such tax appeal/s.

4. Day-to-day expenses to carry on business.

5. Some subscriptttion to be paid compulsorily and to protect the, business interests.

6. Reasonable expenses incurred on Diwali/Puja or other Festivals etc.

7. Royalty paid in connection with the use of trade marks, patents, copyrights, etc.

8. Commission paid to procure orders.

9. Compensation paid to an agent in connection with the termination or modifications in the terms and conditions of his agency.

10. Expenses incurred to oppose the threatened nationalisation of the business. [Morgan V. Tata Lyle Ltd., 35 T. C. 367 (1944) 29 1. T.R. 195].

11. Legal expenses incurred to claim damages or compensation in case of non-fulfilment of a contract.

12. Pension, gratuity and any other voluntary payment given to the employees.

13. Bonus paid on the basis of an industrial award.

14. Any compensation paid to an employee on the termination of his service and also compensation paid to a managing agent on the termination of his agency.

15. Insurance premium paid to get insurance of employees against injury, accident while working and also any compensation paid to employees due to such injury or accident. Payment received from insurance company, if any, shall be treated as taxable income and credited to P & L A/c.

16. Expenses incurred on employees welfare activities.

17. Any compensation payable in the usual course of business including compensation paid as a result of negligence of the assessee or his employees.

18. Any expenditure incurred or compensation paid in lieu of getting the termination of disadvantageous trade contract or liability.

19. Penalty payable for delay in the execution of an order.

20. Any amount spent to make necessary alterations in the memo-randum of association and articles of association.

21. Any expenditure incurred on alterations and modifications made on premises got on lease provided the expenses are necessary for the proper utilisation of the premises.

22. Interest paid or payable on delayed payment of cash. This type of payment is not considered as penalty. [Bairampur Sugar v. C.I. T. (1982) 135 ITR 227 (Cal.)].

23. Amount spent or payable to the Govt. in case of short-fall in the export target. [Addl. C.I. T. v. Tarun Commercial Mills (1976) Tax (B) 48].

24. Amount spent to preserve and protect business assets, interest and reputation. [South Asia Industries v. C.I. T. (1981) 132 ITR 144 (Del.)].

25. Amount paid to the landlord under a compromise to withdraw an eviction suit. [South Asia Industries v. C.I. T. (1981) 132 ITR 144 (Del.)].

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