CBDT notified the list of laws for disallowance of settlement payments

The Income-tax Act, 1961 disallows any expenditure incurred for any purpose which is an offence, prohibited by law or to compound any offence under any law.

The Finance (No. 2) Act, 2024 expanded the scope of the disallowance provision to include within its ambit any expenditure incurred to settle proceedings initiated in relation to a contravention under laws as may be notified by the Central Government.

In this regard, the Central Board of Direct Taxes (CBDT) has issued a notification listing the following laws in relation to which settlement payments would not be allowed as deductions:

The Securities and Exchange Board of India Act, 1992
The Securities Contracts (Regulation) Act, 1956
The Depositories Act, 1996
The Competition Act, 2002

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We thank the GST Council for accepting many of its recommendations at the 53rd GST Council Meeting in New Delhi

The US-India Tax Forum, a dedicated tax policy forum of USISPF, extends its gratitude to the GST Council for accepting many of our recommendations at the recently held 53rd GST Council Meeting in New Delhi.We also thank Deloitte India Mahesh Jaising for their support in taking forward critical issues with the Ministry of Finance.The recommendations of US-India Tax Forum aimed to address significant ease of doing business challenges and promote investments and economic opportunities in India.We remain committed to building on this momentum, addressing areas for reform in GST 2.0 and advocating for better tax policies to improve the ease of doing business environment.