Tax On illegal Income,
> is it taxable, if yes , under which head & under which sec. ?
> if illeagl income taxable, why expenditure related to it not allowed deducattion ?
> why illegal income tax although it is not cover under defination of salary or income or capital gain ?
> If we tax illegal income as income why minimmum exemption (Rs.100000/135000/185000)not given?
Friends I am waiting your suggestion.......
The One Says:
The One had similar queries once and got the following answers from a reputed tax consultant.
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[*]YES, Illegal income is taxable! It is usually under "Income from Other Sources" / "Business Income"
Expenditure against illegal income is not allowed as deduction since there is no provision for such expenditures to be allowed as deduction. However the Supreme Court in the case of CIT vs Pyara Singh laid down that "in respect of an illegal business any expenditure incurred or laid out wholly and solely for the purpose of business is deductible"
The Income Tax Act does not make any distinction between illegal income or legal income. Income (any income) is taxable.
Finally I am not sure about the last one. I think that basic exemption limit is not allowed on public policy grounds otherwise it would tantamount to encouraging illegal activities. However considering the above mentioned judgment any thing seems to be possible!!
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