The Central Board of Direct Taxes (CBDT) has barred income tax deduction on expenditure incurred to settle proceedings related to contraventions or defaults under SEBI Act, Competition Acts and Depositories Act.
The notification specifically states that such expenditure will not be considered as incurred “for the purpose of business or profession,” thereby disqualifying it from deduction. The laws mentioned under this notification include:
- The Securities and Exchange Board of India (SEBI) Act, 1992
- The Securities Contracts (Regulation) Act, 1956
- The Depositories Act, 1996
- The Competition Act, 2002
This directive stems from clause (iv) of Explanation 3 to sub-section (1) of Section 37 of the Income-tax Act, which pertains to disallowance of expenditures incurred in relation to unlawful acts or defaults.
Notification Details
Notification No. 38/2025
Date: 23/04/2025
Read More: India Revises Tariff Values For These Imported Goods Effective April 24, 2025
- Congress Violates Rs. 2,000 Cash Donation Cap: ITAT Upholds Rs. 199 Crore Income Tax Demand - July 23, 2025
- CBDT Enhances Transparency with Revamped Form 26AS - July 22, 2025
- Is Trump’s Reciprocal Tariff Strategy Punishment? - July 22, 2025
