Business and Profession

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

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

Section 37(1) of the Income Tax Act, 1961 is a crucial provision that allows businesses and professionals to claim deductions for expenses incurred wholly and exclusively for business or profession, provided they are not capital or personal in nature and not covered under Sections 30 to 36. This section serves as a residual provision, covering expenses that do not fall under other specific

1. Key Provision Section 37(2B)of the Income Tax Act, 1961, disallows any deduction for expenses incurred on advertisements in political party publications (e.g., souvenirs, brochures, or event sponsorships). This applies to businesses and professionals claiming expenses under “Profits and Gains of Business or Profession” (PGBP). 2. Conditions for Disallowance Nature of Expense: Payments made to political parties or their affiliatesfor advertisements.

Section 38 of the Income Tax Act, 1961 governs deductions for depreciation and other expenses related to assets (buildings, plant & machinery, furniture) that are partly used for business and partly for non-business purposes. 1. Key Provisions A.  Partial Business Use (Section 38(1)) If an asset is not exclusively used for business, deductions are proportionately disallowed. Formula: Allowable Expense = Total Expense

Under the Income Tax Act, 1961, certain expenses are expressly disallowed while computing taxable income under the head “Profits and Gains of Business or Profession” (PGBP). These restrictions are outlined in Sections 40(a), 40(b), and 40(ba) to prevent tax evasion and ensure compliance. Below is a detailed breakdown of these provisions: 1. Section 40(a): Disallowance Due to Non-Compliance with