India: Guidance on when settlement payments cannot be claimed as deductions

Specific laws under which settlement payments are disallowed as deductions

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April 28, 2025

The Central Board of Direct Taxes (CBDT) issued a notification in accordance with a provision of Finance (No. 2) Act, 2024 listing specific laws under which settlement payments cannot be claimed as deductions, effective April 23, 2025. The laws specified by the CBDT include:

  • The Securities and Exchange Board of India Act, 1992
  • The Securities Contracts (Regulation) Act, 1956
  • The Depositories Act, 1996
  • The Competition Act, 2002

Additionally, the CBDT clarified through “frequently asked questions” (FAQs) that no deductions will be allowed for expenditures incurred from FY 2024-2025 onwards for the settlement of proceedings under these laws.

Read an April 2025 report prepared by the KPMG member firm in India

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