Whether Items Like Interest Payments on Loans, Bank Charges, Repairs, etc. Can be Deducted from Gross Income if the Same are Properly Supported by Receipts

July 31, 1995 BIR RULING NO. 116-95 21 (f); 29 000-00 116-95 Glomari Industries No. 8 Makadios Street Sikatuna Village Quezon City Attention: Ms . Marilou del Rosario Proprietor Gentlemen : This refers to your letter dated January 23, 1995, in effect requesting a ruling whether you can deduct from your gross income such items like interest payments on loans, bank charges, repairs, etc., if the same are properly supported by receipts. prcd It appears that you are a single proprietorship and a 100% exporter of garments; and that in the examination of your 1993 income tax return, the foregoing items were disallowed. In reply, please be informed that the only deductions allowed to self-employed and professionals engaged in the practice of their profession are the direct costs specified under R.A. No. 7496, otherwise known as the Simplified Net Income Taxation Scheme (SNITS), amending Section 29 of the Tax Code, as amended. Those costs are exclusive and no other expenses although connected with the trade, business or profession of the taxpayer will be allowed as deduction from the gross income. Accordingly, in computing your taxable income, you can deduct from your gross income the interests paid on loans contracted from accredited financial institutions but not the bank charges and repairs even if they have been paid or incurred in connection with your business as an exporter of garments. llcd Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue