Section 26 of the Income Tax Act governs the taxation of income from properties jointly owned by two or more individuals. It ensures that co-owners are individually assessed on their respective shares of rental income or losses, rather than being taxed as an Association of Persons (AOP). Key Provisions of Section 26 Individual Taxation of Co-owners If a […]
Property Owned by Co-owners [Section 26] Read More »
Short Answer: No, the Annual Value (AV) or Net Annual Value (NAV) of a property cannot be negative under the Income Tax Act. However, the final taxable income from house property can be negative (i.e., a loss) due to deductions like interest on home loans. Detailed Explanation Annual Value (AV) & Net Annual Value (NAV) Cannot Be Negative Annual Value (AV)is the higher of:
Can Annual Value (Net Annual Value) of a House Property be Negative? Read More »
Yes, a loss can arise under “Income from House Property” due to high interest on home loans or low rental income, even though the Annual Value (AV) itself cannot be negative. How Loss Occurs in House Property Income Self-Occupied Property (SOP) Annual Value (AV) = ₹0(since it’s self-occupied). Deduction: Interest on Home Loan (Section 24(b))→ Max ₹2 lakh/year (if loan taken
Can There Be a Loss Under the Head “Income from House Property”? Read More »
Section 28 of the Income Tax Act, 1961 defines the incomes chargeable under the head “Profits and Gains of Business or Profession” (PGBP). It covers both legal and illegal business/professional incomes, with specific inclusions. 1. Incomes Specifically Taxable Under Section 28 CLAUSE INCOME TYPE DESCRIPTION EXAMPLES 28(i) Profits from Business/Profession Net earnings after expenses Shop profits, consultancy fees 28(ii) Compensation for Termination
PARTICULARS AMOUNT (₹) REMARKS Gross Receipts (Sales/Fees) XXX Total business income Less: Cost of Goods Sold (COGS) (XXX) Direct expenses for goods sold Gross Profit XXX Gross Receipts – COGS Add: Other Business Income XXX Interest, commission, export incentives, etc. Less: Allowable Expenses Deductible under Sections 30-37 – Rent, repairs, insurance (XXX) [Section 30] –
1. Business [Section 2(13)] Business includes: Any trade, commerce, or manufacturing activity; Any adventure or concern in the nature of trade(even if short-term or single transaction); Regular transactionswith the intention to earn profits. Key Characteristics: ✔ Profit motive (primary objective); ✔ Regularity (repeated transactions); ✔ Organized activity (systematic operations). Examples: Running a shop, factory, or e-commerce store; Flipping properties for profit; Trading stocks as
Definition of “Business” and “Profession” under the Income Tax Act, 1961 Read More »
Section 28 of the Income Tax Act, 1961, is a key provision that defines the types of income chargeable under the head “Profits and Gains of Business or Profession” (PGBP). This section is crucial for both individuals and entities engaged in business or profession, as it outlines what constitutes taxable business or professional income and
Section 145 of the Income Tax Act, 1961 governs the method of accounting for computing taxable income under the heads “Profits and Gains of Business or Profession” (PGBP) and “Income from Other Sources.” It also introduces Income Computation and Disclosure Standards (ICDS), which standardize income computation for tax purposes. 1. Methods of Accounting [Section 145(1)] Taxpayers must adopt one of the following methods for income computation:
Under the Income Tax Act, 1961, the following business/profession expenses are expressly allowed as deductions when computing taxable income: 1. Deductions for Rent, Repairs & Insurance of Business Premises [Section 30] Section 30 of the Income Tax Act allows deductions for expenses related to business premises under three categories: 1. Rent for Business Premises [Section
Expenses Expressly Allowed as Deductions [Sections 30 to 37] – Complete Guide Read More »
Section 36 of the Income Tax Act, 1961 lists specific deductions allowed against business income, in addition to those under Section 30-35. Below is a structured breakdown: A. Key Deductions Under Section 36 CLAUSE DEDUCTION CONDITIONS & LIMITS 36(1)(i) Insurance Premium (Fire, Marine, etc.) Must be for business assets/stocks 36(1)(ia) Bonus/Commission to Employees Paid within 9 months of FY-end (else deductible in actual payment
Section 36: Other Deductions (Profits & Gains of Business/Profession) Read More »
