New Tax Rule 2025: No Deduction for Settlement Costs
New Tax Rule 2025: No Deduction for Settlement Costs
S.O. 1838(E).—In exercise of the powers conferred by clause (iv) of Explanation 3 of sub-section (1) of section 37 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that any expenditure incurred to settle proceedings initiated in relation to contravention or defaults under the following 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, namely:–
(a) the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(b) the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(c) the Depositories Act, 1996 (22 of 1996);
(d) the Competition Act, 2002 (12 of 2003).
- This notification shall come into force on the date of its publication in the Official Gazette.
Summary:
The Central Government, via notification S.O. 1838(E), under Section 37(1) of the Income-tax Act, 1961, disallows deductions for expenses incurred to settle proceedings related to violations under the following laws: SEBI Act, 1992; Securities Contracts (Regulation) Act, 1956; Depositories Act, 1996; and Competition Act, 2002. Such expenses are not considered as incurred for business or profession purposes. The notification is effective from its publication date in the Official Gazette.
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