If a business regularly hires a cab for an employee, and the cab company issues an invoice in the e…
If a business regularly hires a cab for an employee, and the cab company issues an invoice in the employee's name, but the payment is made through a company cheque, can the business deduct this expense as a business expense even if the invoice is not in the company's name? Please provide guidance on the deductibility of such expenses under tax laws.
Under tax laws, in order to claim an expense as a deduction, it is necessary for the expense to be incurred wholly and exclusively for the business. In the scenario described, if the regular hiring of the cab is for the business, and the payment for the cab is made through a company cheque, then it is possible for the business to claim the expense as a deduction, even if the invoice is not in the company's name.
However, it is important to maintain adequate records and documentation to substantiate the business purpose of the expense, such as the reason for hiring the cab, the identity of the employee using the cab, and the amount paid for the cab. The invoice issued by the cab company in the employee's name should also be kept as supporting documentation.
