The Finance Minister, Nirmala Sitharaman in her Budget Speech has clarified the stand on ‘Health and Education cess’ as business expenditure.
The income-tax is not an allowable expenditure for computation of business income. This includes tax as well as surcharges. The ‘Health and Education Cess’ is imposed as an additional surcharge on the taxpayer for funding specific government welfare programs.
However, some courts have allowed ‘Health and education ‘cess’ as business expenditure, which is against the legislative intent.
“I propose to clarify that any surcharge or cess on income and profits is not allowable as business expenditure,” the Finance Minister while reiterating the legislative intent said.
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