Method for determining amount of expenditure in relation to income not includible in total income

By Vijay Kumar

GOVERNMENT has amended the Income Tax Rules to substitute Rule 8D(2) to stipulate that the expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely:-

(i) the amount of expenditure directly relating to income which does not form part of total income; and

(ii) an amount equal to one per cent of the annual average of the monthly averages of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income:

Provided that the amount referred to in clause (i) and clause (ii) shall not exceed the total expenditure claimed by the assessee.

CBDT Notification No. 43/2016., Dated June 2, 2016