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Profession and Business Income in India

==Profession and Business Income in India==

==What is the meaning of Business & Profession as per Income Tax Act ?==

* ‘Business’ may be defined as any trade, commerce or manufacturing activity. ‘Profession’ may be defined as a vocation, or a job requiring some thought, skill and special knowledge like that of C.A., Lawyer, Doctor, Engineer, Architect etc.

==What expenses can be claimed as deductible expense==

* Rent, Rates, Taxes, Repairs and Insurance of Premises/Buildings.

* Repairs and Insurance of Plant and Machinery, Furniture.
Depreciation on Building, Machinery, Plant & Furniture owned by the Assessee.

* Insurance Prem. Paid for Stock&/or Stores.

* Insurance Premium paid towards Health Insurance Scheme of Employees.

* Interest paid on borrowed Capital for Business/Profession.
PF & Superannuation Fund contribution, approved Gratuity contribution, only if paid before due dates and not on accrual basis.

* Bad Debts written-off as irrecoverable.

* Bonus & Commission paid to Employees.

* The following expenditures are allowed, if incurred, for furtherance of business without any limit:

==Expenditure on==

(a) Entertainment
(b) Compliments
(c) Travelling
(d) Advertisement
(e) Maintenance of Guest House

* Note: Any payment above 20,000 should be made only by Account Payee Cheque/DD. Otherwise, 20% of such expenditure will be disallowed subject to exceptions.

* Limit for making payments for purchases/expenditure, otherwise than by an Account payee cheque/draft, raised to Rs.35,000 in case of payments for plying, hiring or leasing goods carriages.

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