Tax on income disallowance extends to surcharge, cess and related interest, while certain interest tax remains deductible.

Any tax on income is disallowed as a business deduction because it is an application of profits rather than an expense incurred to earn income. The disallowance covers income tax, corporate tax, minimum alternate tax, foreign tax for which relief or credit is available, and surcharge and cess on such taxes. Interest treated as accretion to disallowed tax, including interest under sections 234A, 234B and 234C, is also not deductible, while interest tax paid or payable by a credit institution under the Interest-tax Act, 1974 is deductible.

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