According to Section 37 of Income Tax Act any business expenditure, excluding the capital expenditure and the individuals personal expenses, that is spent entirely for the business operations shall be applicable for deductions.
This will be applicable while calculating a business taxable income which is payable under the head “ profit and gains of business or profession.“
These are the list of expenses under which the exceptions can be claimed u/s 37
While there are certain exceptions where the exceptions under section 37 of Income Tax Act cannot be applied, it states that certain expenditure in related to business activities which are prohibited by law or deemed as offenses, cannot claim deduction u/s 37.
It also states in Section 37 that the expenditures on ‘Corporate Social Responsibility’ activities under Section 135 of Companies Act will not be eligible for deductions.
The Finance Bill 2024-25 states that “ In section 37 of the Income-tax Act, in sub-section (1), in Explanation 3, in clause (iii), for the words “outside India”, the following shall be substituted with effect from 1st day of April, 2025, namely:––
“outside India; or
(iv) to settle proceedings initiated in relation to contravention under such law as may be notified by the Central Government in the Official Gazette in this behalf.”.
Conditions to be fulfilled for the deduction u/s 37 of Income Tax Act are
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