Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Business or Profession

Profits and Gains of Business or Profession [Section 28 to 44D]

Incomes Chargeable to Tax under Profits and Gains of Business or Profession

1.   [Section 28]- List of Incomes Chargeable to Income-Tax The following incomes shall be chargeable to income-tax under the head “Profits and gains of business or profession”: (i)            the profits and gains of any business which was carried on by the assessee at any time during the previous year; (ii)           any compensation or …

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[Section 30 to 37]- Expenses Allowed as a Deduction for computing Income under ‘Profit & Gains of Business or Profession’

1.   [Section 30]- Rent, Rates, Taxes, Repairs and Insurance for Buildings  – for computing Profit & Gains of Business or Profession Deductions In respect of rent, rates, taxes, repairs and insurance for premises, used for the  purposes of the business or profession, the following deductions shall be allowed: (a)           where the premises are occupied …

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[Section 40]- Amounts Not Deductible for computing Profits & Gains of Business or Profession

Notwithstanding anything contained in sections 30 to 38, the following amounts shall not be  deducted in computing the income chargeable under the head profits and gains of business or  profession. (1) [Section 40(a)]- Amounts Not Deductible – In the case of any assessee (i)    Any interest, royalty, fees for technical services, or other sum …

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Rule 6DD – Exception to the [Section 40A(3)(a)] Payment in excess of Rs. 10,000

Rule 6DD prescribes the following Cases or Circumstances in which payment in excess of Rs. 10,000 may be made otherwise than by an Account Payee Cheque or Demand Draft. So no Disallowance will be made of the Expenditure even if the payment exceeding Rs. 10,000 otherwise than by an Account Payee Cheque or Demand Draft. …

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[Section 43B]- Certain Deductions to be Allowed only on Actual Payment

In respect of  certain following expenditure/ payments, the deduction is allowed only if the amount has been actually paid during the previous year. 1.     Any sum payable by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in  force. 2.     Any sum payable by …

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Block of Assets on the basis of Class of Assets and Rates of Depreciation – for Computing Profits and Gains of Business or Professions

1.   “Buildings”  – Block of Assets with Rate of Depreciation Block 1 Buildings which are used mainly for residential purposes except hotels and  boarding houses 5% Block 2 Buildings other than those used mainly for residential purposes and not  covered by sub-items (1) above and (3) below 10% Block 3 (i)  Buildings for installing machinery …

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[Section 43(1)] – Notional Actual Cost of Assets – for Computing Profits and Gains of Business or Professions

Sl.  No.  Situation Notional Actual Cost 1. Asset used in business after it  ceases to be used for Scientific  Research Actual cost of the asset minus the amount of  deduction allowed u/s 35 i.e. it will be ‘Nil’ 2. A capital asset referred to  section 28(via) (i.e. inventory  is converted into/or treated as  capital asset) …

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[Section 32(2)]- Carry Forward and Set Off of Unabsorbed Depreciation

Where in the assessment of the assessee, full effect cannot be given to any depreciation  allowance in any previous year owing to— (a)           there being no profits or gains chargeable for that previous year. or (b)          the profits or gains chargeable being less than the depreciation allowance, then, subject to the provisions of …

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Deemed Profits chargeable to Tax as Business Income [Section 41 and 176(3A) & (4)]

By virtue of section 41, the following receipts are chargeable to tax as business income notwithstanding that the business or profession to which the receipts relate ceased to be in existence in the year in which they are received: 1.   [Section 41(1)]- Recovery against any allowance or deduction allowed earlier   – chargeable to Tax …

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[Section 44AA and Rule 6F]- Maintenance of Accounts by certain persons carrying on Profession or Business

1.   [Section 44AA(1)]- A Person carrying on certain Professions: Every person, carrying on legal medical, engineering or architectural profession, or profession of accountancy or interior decoration or any other profession as is notified by the Board in the Official Gazette is compulsorily required to keep and maintain such books of account and documents as …

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