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INCOME CHARGEABLE UNDER BUSINESS/PROFESSION
The following are few examples of incomes which are chargeable under this head:-

1. Normal Profit from general activities as per profit and loss account of business entity.
2. Profit from speculation business should be kept separate from business income and shown separately.
3. Any profit other than regular activities of a business should be shown as casual income and will be shown under “income from other sources” head.
4. Profit earned on sale of REP License/Exim scrip, cash assistance against export or duty drawback of custom or excise.
5. The value of any benefits whether convertible into money or no from business/profession activities.
6. Any interest, salary, commission etc. received by the partner of a firm will be treated as business/professional income in hand of partner. However, the share of profit from partnership firm is exempt in hand of partner.
7. Amount recovered on account of bad debts which were already adjusted in profit in earlier years etc.

EXPENSES DEDUCTIBLE FROM INCOME FROM BUSINESS/PROFESSION

All the expenses relating to business and profession are allowed against income. Following are few examples of expenditures which are allowed against income:-
• Rent rates and insurance of building.
• Payment for know-how, patents, copy rights, trade mark, licenses.
• Depreciation on fixed assets.
• Payment for professional services.
• Expenditures on scientific research for business purposes.
• Preliminary Expenses in case of Limited companies.
• Salary, bonus, commission to employees.
• Salary, interest and remuneration to working partners subject to certain conditions.
• Communication expenses.
• Traveling and conveyance expenses.
• Membership fees etc.
• Advertisement expenses in respect of promotion of business products.
• Discount allowed to customers.
• Interest on loans (Whether Private of Institutional).
• Bank Charges/Bank Commission expenses.
• Entertainment/Business Promotion expenses
• Staff Welfare expenses.
• Festival Expenses.
• Printing and stationery expenses
• Postage expenses.
• All other expenses relating to business/profession

Note: The above expenditures are allowed on the basis of actual payment as well as on accrual basis at the date of finalization accounts.

EXPENSES WHICH ARE DEDUCTIBLE ON ACTUAL PAYMENT ONLY

Following expenses will be allowed if these expenses have been paid before or on due date or before filing of income tax return:- 1. Any tax, duty, cess or fees by whatever name called.
2. Contribution to provident fund, ESI premium, gratuity fund or other funds for welfare of employees.
3. Bonus or commission or leave encashment payable to employees.
4. Interest on loan from public financial institutions, state financial corporation or from scheduled bank.