+- Accountancy Forum (https://www.accountancy.com.pk/forum)
+-- Forum: The Profession (https://www.accountancy.com.pk/forum/forum-the-profession)
+--- Forum: Tax (https://www.accountancy.com.pk/forum/forum-tax)
+--- Thread: Inadmissible Expenses in Tax (/thread-inadmissible-expenses-in-tax)
Inadmissible Expenses in Tax - Sultanmahmood - 03-02-2010
Please There is anyone who can tell us the expenses which is Inadmissible Expenses in Pakistan under ther Income Tax Ordinance, 2001
- massoodakhter - 03-02-2010
<u><b>Deductions not allowed.</b></u>- Except as otherwise provided in this Ordinance,
no deduction shall be allowed in computing the income of a person under the
head âIncome from Businessâ for -
(a) any cess, rate or tax paid or payable by the person in Pakistan
or a foreign country that is levied on the profits or gains of the
business or assessed as a percentage or otherwise on the
basis of such profits or gains;
(b) any amount of tax deducted under Division III of Part V of
Chapter X from an amount derived by the person;
(c) any salary, rent, brokerage or commission, profit on debt,
payment to non-resident, payment for services or fee paid by
the person from which the person is required to deduct tax
under Division III of Part V of Chapter X or section 233 of
chapter XII, 2[unless] the person has 3[paid or] deducted and
paid the tax as required by Division IV of Part V of Chapter X;
(d) any entertainment expenditure in excess of such limits 4[or in
violation of such conditions] as may be prescribed;
(e) any contribution made by the person to a fund that is not a
recognized provident fund 5[approved pension fund], approved
superannuation fund, or approved gratuity fund;
(f) any contribution made by the person to any provident or other
fund established for the benefit of employees of the person,
unless the person has made effective arrangements to secure
that tax is deducted under section 149 from any payments
made by the fund in respect of which the recipient is
chargeable to tax under the head "Salary";
(g) any fine or penalty paid or payable by the person for the
violation of any law, rule or regulation;
(h) any personal expenditures incurred by the person;
(i) any amount carried to a reserve fund or capitalised in any way;
(j) any profit on debt, brokerage, commission, salary or other
remuneration paid by an association of persons to a member
of the association;
1[ ]
2[(l) any expenditure for a transaction, paid or payable under a
single account head which, in aggregate, exceeds fifty
thousand rupees, made other than by a crossed cheque
drawn on a bank or by crossed bank draft or crossed pay
order or any other crossed banking instrument showing
transfer of amount from the business bank account of the
taxpayer
Provided that online transfer of payment from the business account of the
payer to the business account of payee as well as payments through credit card
shall be treated as transactions through the banking channel, subject to the
condition that such transactions are verifiable from the bank statements of the
respective payer and the payee
Provided further that this clause shall not apply in the case of-
(a) expenditures not exceeding ten thousand rupees;
(b) expenditures on account of â
1 Omitted by the Finance Act, 2006. The omitted clause (k) read as follows
â(k) any expenditure paid or payable by an employer on the provision of perquisites and allowances
to an employee where the sum of the value of the perquisites computed under section 13 and
the amount of the allowances exceeds fifty per cent of the employeeâs salary for a tax year
(excluding the value of the perquisites or amount of the allowances);â
(i) utility bills;
(ii) freight charges;
(iii) travel fare;
(iv) postage; and
(v) payment of taxes, duties, fee, fines or any other
statutory obligation;]
(m) any salary paid or payable exceeding 1[fifteen] thousand
rupees per month other than by a crossed cheque or direct
transfer of funds to the employeeâs bank account; and
(n) except as provided in Division III of this Part, any expenditure
paid or payable of a capital nature.