Business DeductionsBusiness Deductions & Depreciations: - To ascertain the actual Business Profit the expenses and losses are deducted. This article helps you to compute the Business Income and brief introduction to the deductible business expenses and losses. Deductions u/s 30 to 38 [Except section 37(2)]
Steps to Calculate Business IncomeComputation of Income from Business or Profession: - If regular books of accounts have been maintained and Profit and Loss Account has been prepared, then the computation would be as under: -
The above computation requires further adjustments for different entities like Association of Persons (including Trusts), Firms & Companies. Go to Top Business Deductions u/s 30,31 & 38Deductible Business Expenses: - The following list provides the deductible business expenses under sections (30, 31 & 38). Rent, Rates, Taxes and Repairs and insurance for Buildings (SECTIONS 30 & 38) Where the premises are occupied by the assessee as a tenant: -
Where the premises are occupied by the assessee not as a tenant: -
With effect from Assessment Year 2004-2005, Repairs or Current Repairs, shall not include any expenditure, in the nature of Capital Expenditure. Premises Not Exclusively used for Business: - In case of rent, the proportionate annual value of the premises used for Business purpose will be deductible. In the case of any other expenditure mentioned above, the proportionate amount paid by the assessee for the purpose of business or profession will be deductible. Business Deductions for Repairs and Insurance of Machinery, plant and Furniture (SECTIONS 31 & 38) Amount paid on current repairs and insurance premium against risk of damage or destruction on machinery, plant and furniture are eligible for deduction. In the case machinery, plant and furniture are not exclusively used for the purpose of business or profession, then such proportionate amount spent by the assessee for Business is eligible for deduction. Go to Top Business Deductions - DepreciationsDepreciation can be claimed at such percentage prescribed on the written down value (WDV) of the block of assets being tangible or intangible assets. Such intangible assets should have been acquired on or after 01.04.1998. In the case of Power Sector, the depreciation can be claimed at such percentage on actual cost thereof to the assessee, in respect of assets acquired on or after 01.04.1997.The aggregate of business deductions by way of depreciation shall not exceed the actual cost.
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