Non-deductibility of unpaid withholding taxes and levies restricts business deductions until tax or levy is actually paid.

Clause 35 prescribes categories of amounts not deductible for computing income under "Profits and gains of business or profession," disallowing taxes (including surcharge and cess), unpaid withholding taxes or levies, cross-border payments and unpaid equalisation levy, contributions to employee funds absent withholding arrangements, and specified partner or member remuneration and interest where not authorised or exceeding statutory caps; several deeming and restoration rules govern deduction in subsequent years once tax or levy is paid, and definitions of "book profit" and "working partner" are provided.

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