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. 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. 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. 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. 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. Depreciation
• Deprecation is allowed in respect of
• a) Building
• b) Plant & Machinery
• c) Furniture
• d) Motor Vehicles
• e) Computers
• f) Intangibles
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. 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. 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. 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. 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. 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. 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. 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. 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. Disallowance u/s 40a
• Interest Royalty Fees for Professional Services
paid outside India without deducting TDS
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. 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. 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. 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. 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. • Contribution to Non Statutory Funds
• Provision for Unapproved Gratuity Fund
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
