ANALYSIS OF DISALLOWANCE OF CESS AS BUSINESS EXPENDITURE AND RETROSPECTIVE PENALTY IMPOSITION
Barkha Singh
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ABSTRACT
The imposition and collection of taxes has historically been one of the most divisive practices. It has been described by critics as nothing more than sanctioned theft. Its supporters elevate it to the status of a crucial instrument for financing public welfare and realising egalitarianism, an illusive ideal. As with all such disagreements, the truth may lie somewhere in the centre, especially when a tax is applied retroactively. The Finance Act of 2004 was the first to introduce the education cess. The government then discontinued the "education cess" and the "secondary and higher education cess" in the Budget Act of 2018 and instituted a new cess known as the "health and education cess." The tax deductibility of school taxes has generated a great deal of discussion and controversy in the legal world, with arguments and decisions available on both sides of the issue. The Finance Act of 2022's amendments, which seek to "clarify" that cess is not an allowable business expense under Section 40(a)(ii) of the IT Act, are the main subject of this paper. This essay will look at how to read and differentiate between a tax, surcharge, and cess. The second topic this study aims to address is the question of tax statutes' criminal retrospectivity. Examined and questioned as part of the examination are the revisions that regard authorised claims of cess deduction as "under-reporting" income for the purposes of Section 270A of the IT Act.
Keywords
Finance Act 2004
Tax Law
Surcharge
Cess
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