The CBDT vide Notification No. 38/2025 dated April 23, 2025 states that expenditure incurred to settle proceedings related to contraventions under SEBI Act 1992, Securities Contracts Regulation Act 1956, Depositories Act 1996, and Competition Act 2002 will not be deductible for income-tax purposes.
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).
This notification shall come into force on the date of its publication in the Official Gazette.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/04/CBDT-NN-No.-38_2025.pdf
