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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Corporate Tax Planning

Orbit Securities Pvt Ltd, a broker-dealer, paid ₹3,00,000 as securities transaction tax on taxable securities transactions entered into in the course of business. The related income is included under the head 'Profits and gains of business or profession'. Under section 32(k) of the official text, what is the position?

The ₹3,00,000 of securities transaction tax is deductible. Section 32(k) allows it when the taxable transactions are entered into in the course of business during the year and the income from them is included in business profits, and both conditions are satisfied here.

  1. AThe STT is not deductible as it is a tax
  2. BThe STT is deductible, as the transactions were in the course of business and the income is included in business profitsCorrect
  3. CThe STT is deductible only if the transactions were delivery-based
  4. DOnly 50% of the STT is deductible

Explanation

Section 32(k) allows the amount paid as securities or commodities transaction tax if the taxable transactions were entered into in the course of business during the year and the resulting income is included in business profits. Both conditions are met, so the full ₹3,00,000 is deductible. No 50% restriction appears in the text.

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