Deduction Relating to Transaction With Non-Members for Club

Income Tax (Deduction Relating to Transaction With Non-Members for Club, Association or Similar Institution) Rules 2011 [P.U. (A) 360-2011]

The Rules, effective from the year of assessment 2009, provide the details of the formulas to be used to determine the amount of deduction for outgoings or expenses, capital allowances and gift of money under Section 44(6) in arriving at the adjusted income, statutory income and total income respectively of a person, relating to transaction with non-members:-

1)      Deduction for outgoings or expenses in arriving at adjusted income

A    x    B

            C

Where    A -    is the amount of outgoings expenses incurred by the person in the basis period for a year of assessment;

B –    is the gross income from transaction with non-members of the person in the basis period for year of assessment; and

C – is the gross income from transaction with both members and non-members of the person in the basis period for year of assessment.

         2)      Deduction for capital allowances in arriving at statutory income

D   x    E

            F

Where    D -    is the capital allowances made by the person for the basis period for a year of assessment

E –    is the gross income from transaction with non-members of the person in the basis period for year of assessment; and

F –    is the gross income from transaction with both members and non-members of the person in the basis period for a year of assessment.

         3.      Deduction for gift of money under Section 44(6)

G   x    H

              I

Where    G -    is the gift of money made by the person for the basis period for a year of assessment

H –   is the aggregate income from transaction with non-members of the person in the basis period for year of assessment; and

I –     is the aggregate income from transaction with both members and non-members of the person in the basis period for a year of assessment.

Provided that the amount to be deducted under Section 44(6) shall not exceed 7% of the aggregate income. 

“Non-member” is defined as that person who is not entitled to vote at a general meeting of the body at which effective control is exercised over its affairs.