NON-DEDUCTIBLE EXPENSES: AN INSIGHT INTO INCOME TAX REGULATIONS

2. Bonus or Commission Paid to Employees [Section 36(1)]

• If a bonus or commission paid to employees is made after the due date for return filing in a financial
  year, it cannot be considered an expense.

3. Interest on Loans [Section 36(1)]

• Interest paid on personal loans cannot be claimed as a business expense.
• Interest paid on business/professional loans cannot be claimed if it’s paid after the return filing due date for a financial year.

4. Employer’s Contribution for Employee Benefits [Section 36(1)]

• Any contribution made to employee benefit funds such as Provident Fund, Superannuation Fund, and Gratuity Fund cannot be claimed as an expense if paid after the due date for return filing in a financial year.

5. Bad Debts [Section 36(1)]

• Bad debts related to sales can be claimed as an expense, but those related to loans (excluding money lending businesses) cannot.
• Provisions for doubtful debts are also not allowed as an expense.

6. Business and Professional Expenses [Section 37]

• Personal expenses incurred using business money are not deductible.
• Illegal expenses like bribes, secret commissions, etc. are not deductible.
• Expenses related to political party advertisements are not claimable.
• Income tax, interest on income tax, and wealth tax paid cannot be claimed as an expense

7. Cash Payments Exceeding Rs.10,000 to a Single Person in a Day [Section 40A(3)]

• Any single-day expenditure over Rs.10,000 paid in cash to a single person cannot be claimed as an expense.