income from business and profession.pptx
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This document defines key terms related to income from business and profession under the Income Tax Act of 1961 in India. It states that business means any economic activity carried out for earning profits, including trade, commerce, or manufacture. A profession is an occupation requiring intellectual or manual skill, such as law, accounting, engineering, medicine, or authorship. Income from business and profession must be carried out by the assessee in the previous year and includes losses. Illegal businesses are still taxable.
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Profits and Gains of Business or Profession
This document provides information about an income tax course taught by Dr. K. Chellapandian. It includes details about the course code, credit hours, outcomes, units covered, textbooks, and assessment details. The key points are:
- The course is Income Tax Law & Practice - II taught by Dr. K. Chellapandian at Vivekananda College.
- It has 5 units covering topics like computation of profits/capital gains, deductions, assessment of individuals/firms, and tax authorities.
- The course aims to enable students to learn income tax provisions and assessment procedures.
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Nature, Purpose and Scope Of Business
ANY ACTIVITY WHICH IS DONE FOR THE MONETARY CONSIDERATION OR FOR ECONOMICS GAINS IS TERMED AS ECONOMIC ACTIVITY.
ALL ECONOMIC ACTIVITY CAN BE TERMED AS PRODUCTIVE ACTIVITIES.
Income from business and profession
This document provides an overview of income from business and profession under the Indian Income Tax Act with three key points:
1. It defines what constitutes a business or profession according to Section 2(13) of the Act and lists the essential features of a business as regularity of transactions, objective of earning profits, and application of labour and skill.
2. It outlines the various incomes that are chargeable to tax under the head "profits and gains from business or profession" according to Section 28 of the Act, including profits from any business/profession, income from professional associations, sale of import entitlements, and perquisites from business/profession.
3. It discusses the scheme of allowable
Tax prft and-gains
1. Profits and gains from business and profession is the largest head of income under the Income Tax Act, covering everyone from small shop owners to large businesses.
2. There are two main parties involved - the assessee or tax paying entity, and the income tax department which collects taxes.
3. For an activity to be considered a business, it must involve trade, commerce or manufacture; have a profit motive; and be under the assessee's control.
4. Income from business is taxed based on net income (gross income minus legitimate expenses), not total sales. Certain income sources like rent from self-occupied property are taxed separately.
Tax prft and-gains
1. The document discusses various aspects of taxation of profits and gains from business and profession under the Indian Income Tax Act 1961.
2. It explains the key concepts including what constitutes a business, requirements for an activity to be considered a business, calculation of business income by deducting allowable expenses from gross receipts, and treatment of capital vs. revenue expenditures.
3. The document also covers topics like block concept of depreciation, deduction for scientific research expenditure, and deduction for acquisition of patent rights and know-how.
Hobby vs. business_2021
If an individual, partnership, estate, trust, or an S corporation
engages in an activity that is not conducted as a
for-profit business, expenses (other than cost of goods sold)
are not deductible. This rule does not apply to corporations,
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a for-profit business, deductions can exceed income, allowing
the resulting loss to offset other income.
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This document provides information about an income tax course taught by Dr. K. Chellapandian. It includes details about the course code, credit hours, outcomes, units covered, textbooks, and assessment details. The key points are:
- The course is Income Tax Law & Practice - II taught by Dr. K. Chellapandian at Vivekananda College.
- It has 5 units covering topics like computation of profits/capital gains, deductions, assessment of individuals/firms, and tax authorities.
- The course aims to enable students to learn income tax provisions and assessment procedures.
- Assessment includes 40% theory and 60% problems, following amendments up to 6 months
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Nature, Purpose and Scope Of Business
ANY ACTIVITY WHICH IS DONE FOR THE MONETARY CONSIDERATION OR FOR ECONOMICS GAINS IS TERMED AS ECONOMIC ACTIVITY.
ALL ECONOMIC ACTIVITY CAN BE TERMED AS PRODUCTIVE ACTIVITIES.
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This document provides an overview of income from business and profession under the Indian Income Tax Act with three key points:
1. It defines what constitutes a business or profession according to Section 2(13) of the Act and lists the essential features of a business as regularity of transactions, objective of earning profits, and application of labour and skill.
2. It outlines the various incomes that are chargeable to tax under the head "profits and gains from business or profession" according to Section 28 of the Act, including profits from any business/profession, income from professional associations, sale of import entitlements, and perquisites from business/profession.
3. It discusses the scheme of allowable
Tax prft and-gains
1. Profits and gains from business and profession is the largest head of income under the Income Tax Act, covering everyone from small shop owners to large businesses.
2. There are two main parties involved - the assessee or tax paying entity, and the income tax department which collects taxes.
3. For an activity to be considered a business, it must involve trade, commerce or manufacture; have a profit motive; and be under the assessee's control.
4. Income from business is taxed based on net income (gross income minus legitimate expenses), not total sales. Certain income sources like rent from self-occupied property are taxed separately.
Tax prft and-gains
1. The document discusses various aspects of taxation of profits and gains from business and profession under the Indian Income Tax Act 1961.
2. It explains the key concepts including what constitutes a business, requirements for an activity to be considered a business, calculation of business income by deducting allowable expenses from gross receipts, and treatment of capital vs. revenue expenditures.
3. The document also covers topics like block concept of depreciation, deduction for scientific research expenditure, and deduction for acquisition of patent rights and know-how.
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If an individual, partnership, estate, trust, or an S corporation
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for-profit business, expenses (other than cost of goods sold)
are not deductible. This rule does not apply to corporations,
other than S corporations. If an activity is considered
a for-profit business, deductions can exceed income, allowing
the resulting loss to offset other income.
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You may deduct 20% of qualified business income from a
partnership, S corporation, LLC, or sole proprietorship. In
the case of a partnership or S corporation, the deduction applies
at the partner or shareholder level. The business must
be conducted within the United States. Special rules apply
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Here are the key steps to solve this problem:
1. Calculate income from salary: Rs. 3,60,000
2. Calculate income from business:
- Sales: Rs. 80,00,000
- Gross Profit: 25% of Sales = Rs. 80,00,000 * 25% = Rs. 20,00,000
3. Calculate admissible deductions:
- Utility bills: Rs. 80,000 (fully admissible)
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The document discusses various topics related to income from business under the Income Tax Ordinance 2001 in Pakistan, including:
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2. Recognize the various items included in gross income.
3. Determine when items are included in income.
4. Understand the rules governing alimony.
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7. Understand the rules governing the discharge of indebtedness for both solvent and insolvent taxpayers.
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Gross income, according to the Internal Revenue Code, includes all income unless specifically exempted by law. This comprehensive definition requires a more probing discussion of what must be included in income. Further, we must concern ourselves with “how much” must be included in income and what portion of total income may be excluded.
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A frustrating characteristic of the English language is that a single term can be used to express a variety of concepts. Take the concept of income: economists, the courts, and accountants use this term, but for each, the definition imparts a singular view.
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¶4015
THE LEGAL/TAX CONCEPT OF INCOME
The legal concept of income is also less precise than that of the accountant. Congress has not defined income, but has specified how particular items of income are to be taxed. The concept of income has crystalized through a series of court cases. The legal concept is different from the economic and accounting concepts. Gross income includes “ ...
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02. introduction to income ICAB, KL, Study Manual
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02. introduction to income ICAB, KL, Study Manual02. introduction to income ICAB, KL, Study Manual
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Here are the key steps to solve this problem:
1. Calculate income from salary: Rs. 3,60,000
2. Calculate income from business:
- Sales: Rs. 80,00,000
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3. Calculate admissible deductions:
- Utility bills: Rs. 80,000 (fully admissible)
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The document provides definitions and concepts related to income tax in India. It defines key terms like assessee, assessment, person, income, direct tax, indirect tax. It explains the types of taxes and why taxes are levied. It describes the procedure for computing total income which involves determining residential status, classifying income under different heads, setting off losses, deductions and arriving at tax payable.
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The document discusses various topics related to income from business under the Income Tax Ordinance 2001 in Pakistan, including:
1) It defines business and the various types of business according to the ordinance such as trade, manufacturing, commerce, etc.
2) It explains the types of income that are chargeable under business and the categories of income from business.
3) It discusses the two types of business - speculation business and non-speculation business - and the tax treatment of losses and profits from each.
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This document discusses various tax planning strategies under Indian law. It defines tax planning as legally arranging one's financial affairs to minimize tax liability. Tax planning is legitimate if done within the law, unlike tax evasion which is illegal. The document outlines three common tax practices - planning, avoidance, and evasion. While avoidance is legal but aims to reduce taxes, evasion is illegal. It also discusses the importance of tax planning for expenses, investment, and economic stability. Areas of planning include strategies for individuals, setting up new businesses, and existing companies.
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The document discusses taxation in Pakistan. It provides definitions of direct taxes, which are paid directly to the government, and indirect taxes, which are collected by intermediaries. It notes that the government collects 37% of total tax revenue from direct taxes and 63% from indirect taxes. It also discusses tax evasion, which is illegal, versus tax avoidance, which uses legal loopholes. Statistics are given showing low registration and filing rates for corporate and sales taxes. Factors that encourage tax evasion in Pakistan include lack of strict enforcement, complicated systems, lack of benefits for taxpayers, and corruption. Recommendations to reduce evasion include improved audits, amnesty programs, lower rates, simplicity, anti-evasion policies, and
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This document provides instructions for completing Schedule E of Form 1040 to report supplemental income and loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs. Key details include:
- Schedule E is used to report income or loss from various sources including rental real estate, royalties, partnerships, and S corporations.
- Forms that may also need to be filed depending on the type of income include Form 4562 for depreciation, Form 4797 for sales of business property, and Form 8582 for passive activity losses.
- Special rules apply for husband-wife qualified joint ventures treating a jointly owned and operated rental real estate business as
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The document provides an overview of Pakistan's tax structure, including direct and indirect taxes. It discusses income tax, sales tax, corporate tax rates, and the proposed goods and services tax (RGST) which would replace existing sales tax and excise regimes. The RGST is essentially a value-added tax with a 15% rate that would be applied incrementally at each stage of production and distribution. It is aimed at simplifying the tax system and reducing evasion, but may increase costs to consumers.
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Chapter
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Gross Income
OBJECTIVES
After completing Chapter 4, you should be able to:
1. Define and distinguish among the various concepts of income: economic, accounting, and legal.
2. Recognize the various items included in gross income.
3. Determine when items are included in income.
4. Understand the rules governing alimony.
5. Differentiate alimony from child support.
6. Comprehend the rules for recapturing alimony.
7. Understand the rules governing the discharge of indebtedness for both solvent and insolvent taxpayers.
OVERVIEW
Gross income, according to the Internal Revenue Code, includes all income unless specifically exempted by law. This comprehensive definition requires a more probing discussion of what must be included in income. Further, we must concern ourselves with “how much” must be included in income and what portion of total income may be excluded.
The Concept of Income
A frustrating characteristic of the English language is that a single term can be used to express a variety of concepts. Take the concept of income: economists, the courts, and accountants use this term, but for each, the definition imparts a singular view.
¶4001
ECONOMIC INCOME
The economic concept of income is more general than the accounting definition. The most commonly accepted definition of economic income is that of J. R. Hicks. He defines economic income as being “the maximum amount a person can consume during a week and still expect to be as well-off at the end of the week as he was at the beginning.” J. R. Hicks, Value and Capital (Oxford: Clarendon Press, 1946), p. 172. This assumes that there were no capital contributions or withdrawals during the period measured. The economist’s definition is not practical for tax purposes because the concept of “well-being” is not capable of objective measurement. The economic concept of income places a heavy emphasis on the future. No objective rules exist for determining well-being at any moment in time. Economists must deal in terms of real wealth, which includes holding gains and losses rather than monetary wealth alone. H. C. Simons maintained, “The precise, objective measurement of income implies the existence of perfect markets from which one, after ascertaining quantities, may obtain the prices necessary for routine valuation of all possible inventories of commodities, services, and property rights.” Personal Income Taxation (Chicago: University of Chicago Press, 1921), p. 50. Since no such markets exist where the necessary prices for valuation may be obtained, the economic concept is an inappropriate measure of taxable income.
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The legal concept of income is also less precise than that of the accountant. Congress has not defined income, but has specified how particular items of income are to be taxed. The concept of income has crystalized through a series of court cases. The legal concept is different from the economic and accounting concepts. Gross income includes “ ...
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02. introduction to income ICAB, KL, Study Manual02. introduction to income ICAB, KL, Study Manual
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income from business and profession.pptx
- 1. INCOME FROM BUSINESS BY SRIDHARA G M.COM, NET, KSET, (Ph.d)
- 2. PROFITS AND GAINS FROM BUSINESS AND PROFESSION Profits : Excess income over expenditure. Gains : Any incidental revenue from business. As the rules for the assessment of business, profession or vocation are the same, there is no importance of making any distinction between them for income tax purposes.
- 3. INCOME FROM BUSINESS AND PROFESSION- UNDER THE INCOME TAX ACT, 1961 MEANING OF BUSINESS : SEC 2(13) BUSINESS MEANS ANY ECONOMIC ACTIVITY CARRIED ON FOR EARNING PROFITS. IT INCLUDES, TRADE COMMERCE MANUFACTURE ANY ADVENTURE OR CONCERN IN THE NATURE OF TRADE, COMMERCE OR MANUFACTURE.
- 4. TO JUDGE A TRANSACTION AS BUSINESS TRANSACTION, FOLLOWING POINTS SHOULD BE CONSIDERED 1. Nature of commodity 2. Nature of transaction (Whether incidental to a business or not) 3. Intention of the related party 4. Duration of transaction 5. Effort applied in transaction.
- 5. MEANING OF PROFESSION: SEC 2(36) A PROFESSION IS AN OCCUPATION REQUIRING PURELY INTELLECTUAL SKILL OR MANUAL SKILL. E.g. LAWYER, ACCOUNTANT, ENGINEER, DOCTOR, AUTHOR. IT ALSO INCLUDES VOCATION. VOCATION : VOCATION IMPLIES NATURAL ABILITY OF A PERSON TO DO SOME PARTICULAR WORK E.G. SINGING, DANCING, ETC. HERE, NO TRAINING OR NO QUALIFICATION IS REQUIRED BUT HAVING NATURAL ABILITY.
- 6. INCOME FROM BUSINESS & PROFESSION KEY POINTS : MUST BE CARRIED ON BY ASSESSEE. MUST BE CARRIED ON DURING THE PREVIUOS YEAR. ONLY PROFIT OF THE PREVIOUS YEAR ARE TO BE TAXED. INCOME INCLUDES NEGATIVE INCOME i.e. loss. THERE IS NO DIFFRENCE BETWEEN LEGAL AND ILLEGAL BUSINESS FOR TAXATION PURPOSE. EVEN INCOME FROM ILLEGAL BUSINESS SHALL BE TAXABLE. A PERSON CANNOT DO BUSINESS WITH ONE SELF.HENCE NOTIONAL PROFIT IS NOT TAXABLE. IF A PROPRIETOR WITHDRAWS GOODS COSTING RS.50000 FOR PERSONAL USE AT AN AGREED VALUE OF RS.60000 THEN PROFIT OF RS.10000 SHALL NOT BE TAXABLE.