Section 40A(2) of the Income Tax Act, 1961, basically deals with the empowerment of income tax assessing officers. This section lets them to not permit certain kinds of expenditures to be claimed as deduction made to specific individuals.
This section of the Income Tax Act empowers the assessing income tax officer to not allow certain types of expenses to be claimed as deduction made to specific persons if he/she feels the need to do so in the backdrop of such expenditure being undervalued or unreasonable to the fair market value of the goods or services.
The following conditions should be satisfied before disallowing the deduction of the assessee:
The different categories of taxpayers for imposing the provisions of section 40A(2) are as follows.
A person will considered to have substantial interest in the business or profession on satisfying the conditions below.
Credit Card:
Credit Score:
Personal Loan:
Home Loan:
Fixed Deposit:
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