Ministry of Finance Department of Revenue Central Board of Direct Taxes

Notification under Section 37 of the Income Tax Act, 1961

Issue Date: 23 April 2025 Published: 23 April 2025

Gazette ID: CG-DL-E-23042025-262636 Download PDF

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Core Purpose

Notifies that expenses to settle proceedings for contraventions under certain laws are not deductible business expenditures under the Income-tax Act, 1961.

Detailed Summary

The Central Government, exercising powers conferred by clause (iv) of Explanation 3 of sub-section (1) of section 37 of the Income-tax Act, 1961, has notified that any expenditure incurred to settle proceedings initiated in relation to contraventions or defaults under specific laws shall not be deemed to have been incurred for the purpose of business or profession. Consequently, no deduction or allowance shall be made in respect of such expenditure under the Income-tax Act, 1961. The laws covered by this notification are the Securities and Exchange Board of India Act, 1992; the Securities Contracts (Regulation) Act, 1956; the Depositories Act, 1996; and the Competition Act, 2002. This notification comes into force on the date of its publication in the Official Gazette.

Full Text

REGD. No. D. L.-33004/99 The Gazette of India CG-DL-E-23042025-262636 EXTRAORDINARY PART II-Section 3-Sub-section (ii) PUBLISHED BY AUTHORITY No. 1805] NEW DELHI, WEDNESDAY, APRIL 23, 2025/VAISHAKA 3, 1947 MINISTRY OF FINANCE (Department Of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 23rd April, 2025 (INCOME-TAX) 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). 2. This notification shall come into force on the date of its publication in the Official Gazette. [F. No. 38/2025/F. No 370142/11/2025-TPL] ASHISH KUMAR AGRAWAL, Dy. Secy.

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