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Profits and Gains of Business
or Profession
Basis of Charge (Section 28)
 Following Incomes shall be charged to tax under this
head
 1. Profit and Gains of any busi...
Basis of Charge (contd.)
 5. Value of any benefit or perquisite, whether
convertible into money or not, arising from
busi...
Business & Profession
 Business
includes any Trade, Commerce or Manufacture
or any adventure in the nature of Trade,
Comm...
Deduction Allowable
 1. Rent, Rates, Taxes and Insurance of Building
( u/s 30)
 2. Repairs and Insurance of Machinery, P...
Depreciation (u/s 32)
 Following conditions are to be fulfilled.
 a) Assessee must be owner of the Asset.
 b) Asset mus...
Depreciation








Deprecation is allowed in respect of
a) Building
b) Plant & Machinery
c) Furniture
d) Motor Ve...
Depreciation
 Depreciation is allowed on the Written Down
Value of Block of Assets
 Opening WDV
XX
 Add : Purchases dur...
Additional Depreciation
 Additional Deprecation @ 20 % of Actual Cost
of Machinery acquired after 31.03.2002 for
 a) New...
Expenditure of Scientific Research U/s 35
 Any Expenditure (other than Cost of Land) expended on
scientific research rela...
Expenditure for Obtaining License to operate
Telecommunication Services U/s 35ABB

 Allowed as Deduction equally over the...
Other Expenditures
 35AC : Expenditure on Eligible Projects
 35CCA : Expenditure for carrying out rural
development prog...
Amortisation of
 Preliminary Exp deduction is allowed in 5
Years ( Section 35D)
 Amortisation of Amalgamation or Demerge...
Other Deduction u/s 36
 i) Insurance premium paid to cover the risk
of damage or destruction of Stock
 Ii) Bonus or Comm...
General Expenses u/s 37
 Conditions to be fulfilled
 i) Expenditure should not be in the
nature prescribed u/s 30 to 36
...
Advertisement Expenses
( Section 37(2B)
 Deduction is not allowed in respect of
expenditure incurred by an assessee
on ad...
Disallowance u/s 40a
 Interest Royalty Fees for Professional
Services paid outside India without
deducting TDS
Disallowance us/s 40 a









Payment to Resident without deducting TDs
Following payments are covered
I) Intere...
Disallowance us/s 40 a
Securities Transaction Tax
Fringe Benefit Tax
Income Tax
Wealth Tax
Salary paid outside India witho...
Disallowance u./s 40 (b)
 Amount not Deductible in case of
Partnership Firm
 I) Interest exceeding the rate
specified in...
Remuneration to Partner
 Is allowed upto the following limits
 First Rs 3,00,000 - 90 % or Rs 1,50000

which ever is hi...
Disallowance u/s 40 A
 Excessive Payment to Relatives
 Payment exceeding Rs 20,000 in
mode otherwise than Crossed cheque...
 Contribution to Non Statutory Funds
 Provision for Unapproved Gratuity
Fund
Section 43 B : Deduction on
Payment Basis
 Following will be allowed as Deduction on actual paid
basis.
 Outstanding amo...
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Profits and-gains-of-business-or-profession4

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Income tax

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Profits and-gains-of-business-or-profession4

  1. 1. Profits and Gains of Business or Profession
  2. 2. Basis of Charge (Section 28)  Following Incomes shall be charged to tax under this head  1. Profit and Gains of any business or Profession carried on by the assessee  2. Any Compensation or other payments due or received by assessee, for loss of agency, due to termination or modification in terms and conditions of such agency  3. Income derived by a trade, professional or similar association, for specific services performed; for its members.  4. Export Incentives received by Exporter such as Sale of licenses, Cash Assistance, Duty Drawback
  3. 3. Basis of Charge (contd.)  5. Value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession  6. Interest, Salary, Bonus, Commission or remuneration due o or received by, a partner of a firm from such firm.  7. Sum Received or receivable in cash or kind for  a) not carrying out any activity  b) not sharing any knowhows, patent etc.  8. Sum Received under Keyman Insurance Policy  9. Income from Speculative Business.
  4. 4. Business & Profession  Business includes any Trade, Commerce or Manufacture or any adventure in the nature of Trade, Commerce or Manufacture. Profession: means an occupation requiring specialised Knowledge and Skill. Vocation: is an activity in which an assessee has specialised skill for earning Income.
  5. 5. Deduction Allowable  1. Rent, Rates, Taxes and Insurance of Building ( u/s 30)  2. Repairs and Insurance of Machinery, Plant and Furniture (u/s 31)
  6. 6. Depreciation (u/s 32)  Following conditions are to be fulfilled.  a) Assessee must be owner of the Asset.  b) Asset must be used for the purpose of business or Profession.  c) Such use must be in the relevant previous year.
  7. 7. Depreciation        Deprecation is allowed in respect of a) Building b) Plant & Machinery c) Furniture d) Motor Vehicles e) Computers f) Intangibles
  8. 8. Depreciation  Depreciation is allowed on the Written Down Value of Block of Assets  Opening WDV XX  Add : Purchases during the year XX  Less : Sales during the year XX  Closing WDV XX  Note : If the Asset is put to use for less than 180 Days in the year, depreciation will be allowed at 50 % of the eligible rate.
  9. 9. Additional Depreciation  Additional Deprecation @ 20 % of Actual Cost of Machinery acquired after 31.03.2002 for  a) New Industrial Undertaking  b) Existing Industrial Undertaking Note : If the Asset is put to use for less than 180 Days in the year, depreciation will be allowed at 50 % of the eligible rate.
  10. 10. Expenditure of Scientific Research U/s 35  Any Expenditure (other than Cost of Land) expended on scientific research related to the business.  Contribution to  i) Association, university, college for the purpose of Scientific Research  ii) National Laboratory  eligible for 175 % Deduction  iii) Association, university, college for the purpose of research in social sciences or statistical research  eligible for 125 % Deduction  In House Research in specified industries eligible for  200 % Deduction
  11. 11. Expenditure for Obtaining License to operate Telecommunication Services U/s 35ABB  Allowed as Deduction equally over the number of years of Validity of Licenses
  12. 12. Other Expenditures  35AC : Expenditure on Eligible Projects  35CCA : Expenditure for carrying out rural development programmes  35 CCB : Expenditure for carrying out programmes of conservation of natural resources.
  13. 13. Amortisation of  Preliminary Exp deduction is allowed in 5 Years ( Section 35D)  Amortisation of Amalgamation or Demerger in 5 Years (Section 35DD)  Amortisation of VRS Expenses in 5 Years  ( Section 35DDA)  Expenditure on Minerals Prospecting in 10 Years (Section 35E)
  14. 14. Other Deduction u/s 36  i) Insurance premium paid to cover the risk of damage or destruction of Stock  Ii) Bonus or Commission paid to Employees  Iii) Interest on Borrowed Capital  iii) Contribution to Recognised Provident Fund  iv) Contribution to Approved Gratuity Fund  V) Write off of useless or Dead Animals  Vi) Bad Debts  Vii) Expenditure on promotion of Family Planning among employees
  15. 15. General Expenses u/s 37  Conditions to be fulfilled  i) Expenditure should not be in the nature prescribed u/s 30 to 36  ii) Not a Capital Expenditure  iii) Not Personal Expenditure  iv) for the purpose of Business
  16. 16. Advertisement Expenses ( Section 37(2B)  Deduction is not allowed in respect of expenditure incurred by an assessee on advertisement in any souvenir, brochure, tract, pamplet or like published by a political party.
  17. 17. Disallowance u/s 40a  Interest Royalty Fees for Professional Services paid outside India without deducting TDS
  18. 18. Disallowance us/s 40 a         Payment to Resident without deducting TDs Following payments are covered I) Interest II) commission or Brokerage III) Rent Iv) Fees for Technical or Professional Services V) royalty VI) Payment to Contractor
  19. 19. Disallowance us/s 40 a Securities Transaction Tax Fringe Benefit Tax Income Tax Wealth Tax Salary paid outside India without deducting TDS  Provident Fund payment without deducting TDS  Tax on Prequisites paid by the employer     
  20. 20. Disallowance u./s 40 (b)  Amount not Deductible in case of Partnership Firm  I) Interest exceeding the rate specified in the Partnership Deed or 12 % whichever is lower  II) Remuneration to Partner
  21. 21. Remuneration to Partner  Is allowed upto the following limits  First Rs 3,00,000 - 90 % or Rs 1,50000  which ever is high  Balance - 60 %
  22. 22. Disallowance u/s 40 A  Excessive Payment to Relatives  Payment exceeding Rs 20,000 in mode otherwise than Crossed cheque  (Entire amount is disallowed)
  23. 23.  Contribution to Non Statutory Funds  Provision for Unapproved Gratuity Fund
  24. 24. Section 43 B : Deduction on Payment Basis  Following will be allowed as Deduction on actual paid basis.  Outstanding amount has to be paid before Due Date of Filing of Return of Income.  i) Any Tax, Duty paid to government  ii) Contribution to PF  iii) Bonus or Commission  iv) Interest on Loans from financial  institution  V) Interest on Loans from Scheduled Bank  Vi) Leave Salary to Employees

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