income from businedd inadmissible expenses u/s
Answers
Answer:
Contrary to the principle specific admissibility regime of Section 20; the Income tax Ordinance, 2001 contemplates u/s 21 an expenditure specific inadmissibility regime for the purposes of computing taxable income of a taxpayer under the head of “income from business”. There are 13 types of specific expenditures which are not admissible as an expense against business income.
The evaluation of the nature, style, manner, pre-qualifications and the set of circumstances covering the 13 types of specified expenditures are under written by concrete tax policy. The tax policy options are rooted in seven under lying principles:
Tax is not a cost component for doing business.
Personal expenditure can not be claimed as a proxy expenditure against business income.
Taxes are tools to influence behavior of a taxpayer to make him more compliant to tax laws in particular and other laws of the land in general.
Business related entertainment expenditure must conform to the socio cultural norms of propriety.
Taxes are an instrument for ensuring documentation of economy
A capital expenditure is not cost component for doing business unless specifically stated.
An Association of Persons and its members are not two distinct legal entities.
Explanation:
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