Management expenses

Management expenses refer to the costs incurred in the administration and supervision of a business’s operations. These expenses typically include salaries of managerial staff, office rent, administrative overheads, audit fees, and other costs related to managing the enterprise.

Tax Treatment: Management expenses are generally deductible when computing taxable profits, provided they are wholly and exclusively incurred for business purposes. In the case of a group of companies, it becomes important to allocate and recover the appropriate share of general management expenses from each subsidiary or associated company. The allocation should be reasonable, justifiable, and based on actual services rendered to avoid tax disputes.

Example: If a parent company incurs ₹10 lakh in general management expenses for overseeing three subsidiaries, each subsidiary should bear a fair proportion of these costs — for instance, based on turnover, headcount, or specific services utilized