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Anyone please give an example on section 14A

Answers (5)

Sec 14A is for Expenditure incurred in relation to income not includible in total income. So expenses incurred for agricultural practices cannot be allowed if there is agricultural income

But I want an example on second point, precisely I want mathematical application

But I want an example on second point, precisely I want mathematical application

Rule 8D provides maximum disallowance under Sec14A = Direct expenditure related to exempt income + 1% of average investments (if income on investment is exempt) Loan taken for investments - interest on loan is direct exp 1 step - compute monthly averages of investment balances 2 step - compute annual average of 1st step 3 step - compute 1% of step 2 4 step - add 1% computed to direct exp see the example posted by Deepak Gupta