Explanation 3 to section 40(a)(ii) inserted by Finance Act, 2022 with effect from 1-4-2005 makes it clear that any surcharge or cess forms part of ‘tax’ and same cannot be allowed as deduction while computing profits and gains of business of assessee. Therefore, education cess is not allowable as deduction. (AY. 2016-17)
Cypress Semiconductor Technology India (P.) Ltd. v. DCIT (2022) 197 ITD 31 (Bang.)(Trib.)
S. 40(a)(ii) : Amounts not deductible-Rates or tax-Education cess is not allowable as deduction. [S. 37 (1)]