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of <h1>Section 198: Rules for Calculating Net Profits for Managerial Pay, Including Allowed Deductions and Mandatory Exclusions</h1> Section 198 prescribes how a company's net profits must be computed for the purpose of managerial remuneration under section 197. It mandates inclusion of specified government bounties and subsidies, and exclusion of certain items such as share/debenture premium (with an exception for specified investment companies), capital profits, gains from sale of capital assets, unrealised or notional gains, and fair value remeasurements. It requires deduction of working charges, directors' remuneration, staff bonuses/commissions, notified special taxes, interest, repairs (non-capital), certain outgoings, depreciation, prior excess expenditure, legal compensation, related insurance, and bad debts. It prohibits deduction of income tax, voluntary payments, capital losses of specified kinds, and fair value reserve movements.
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