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| Royalty, Technical Know-How |
Deductibility Limit for Royalty, Technical Know-How, and Related Fees:
According to the previous provision under Clause (nga), expenses incurred on account of royalty, license fees, technical services, or technical know-how were deductible up to 10% of the net business profit, as disclosed in the financial statements.
However, under the new provision, the deductibility limit has been revised as follows:
· For companies with a turnover exceeding 6% of net business profit or, the maximum allowable deduction for such expenses shall be 15% of the net business profit.
· Any expense exceeding this limit will not be allowed as a deductible expense for tax purposes.
This revised provision will be effective from the assessment year 2025–2026.
Tags:
income Tax Act-2023