Disallowance typically refers to the rejection or non-acceptance of certain expenses, deductions, or claims made by a taxpayer while computing their taxable income. This can occur during the assessment or audit conducted by tax authorities. Disallowance may happen for various reasons, such as non-compliance with tax laws, inadequate documentation, or incorrect information provided by the taxpayer.
In the context of TDS (Tax Deducted at Source), disallowance could occur if there are discrepancies in the TDS-related transactions or if the taxpayer fails to adhere to TDS regulations. For example, if a taxpayer fails to deduct TDS where required or does not deposit the deducted TDS with the government within the specified time frame, tax authorities may disallow certain benefits or deductions.
Taxpayers need to comply with tax laws, maintain proper documentation, and ensure accurate reporting to avoid disallowances during tax assessments. Specific disallowance rules may vary based on the tax jurisdiction and regulations applicable in a particular country.