222

$show=home

Welcome to Accounting Education

The Accounting University with 3400+ Accounting contents as study material which can watch, read and learn anyone, anywhere.

Start your studies

$show=home

Journal Entries $type=three$count=6$author=hide$comment=hide$label=hide$date=hide$show=home$s=0

Balance Sheet $type=three$count=6$author=hide$comment=hide$label=hide$date=hide$show=home$s=0

Profit and Gains from Business and Profession as Per Income Tax Law

Profit and gains from business and profession is taxable as per income tax law 1961. But way of calculating net profit in IT law is different from accounting. As per income tax law, all expenses are not allowed as deduction in profit and loss account. Following are main expenses and losses which are allowed and will be debited in profit and loss account for calculating profit and gains from business and profession.


Profit and Loss Account As per Income Tax Law

Expenses As per Income Tax Law  Incomes as Per Income Tax Laws
Expenses
Net Profit
 XXXX
 XXXX
  Incomes  XXXX


Expenses As per Income Tax Law

1. Depreciation ( Section 32 ) 


As per section 32 of Income tax law, depreciation will be debited with the rates which are allowed in the law and updated ever year in finance bill. There are also other rules which an assessee should remember:

(a) Rates of Depreciation 

For assessment year 2011-2012, following are the depreciation rates. With these rates, you have to calculate depreciation and you can deduct same amount for calculating net profit taxable as per income tax law.


Fixed Assets Rate of Depreciation
 (A) Tangible Assets
1. Furniture 10%
2. Computer 60%
3. Building
 Residential Building 5%
Non-Residential Building 10%
4. Motor Vehicle 15%
5. Machinery 10%
Fan Same
Inverter Same
Water Pump Machine Same
Air Boiler Same
Other Machines Same
6. Books 60%
7. Annual Publication 100%
(B) Intangible Assets 25%
Know-how, trade-mark, copyright, patents, goodwill etc.


(b) Method of Depreciation

As per income tax law, we have to apply written down value method for calculating depreciation instead of fixed installment method.

(c) Time 

 If we have used assets for 180 days or more, full year depreciation will be allowed, otherwise 1/2 year depreciation will be allowed.

(d) Not Allowable Depreciation

Depreciation is not allowed on land and after sale of any fixed asset.

2. Rent

If you are doing business or profession  on rented building, its actual rent is allowed. If some part of building, you are using for personal use, its rent will not be allowed.

3. Salaries of Employees 

All your employees' actual salary is allowed as expense of your business.

4. Repair of Business Assets 

If you pay for repair of different business assets, its cost will be allowed as expenses

5.  Sales Promotion and Advertising Expenses 

If you pay for sales promotion and advertising of your business's products, its cost will be allowed as expenses.

6. General Office and Administration Expenses 

All general office and administration expenses are allowed for deduction as expenses under income tax law. In this, we can include Internet bill, telephone and mobile bill, petrol bill, stationery and printing expenses etc.

7. Other Business expenses 

All revenue nature business expenses except capital expenses, personal expenses, legal expenses for getting property or long term fixed assets, penalties, unrecognized donations and advance paid of income tax.

{Important Note : After calculating net profit from one business or profession, we will calculate our other businesses and professions net profits. Suppose, we have 10 businesses. If we have suffered net loss in any business, it will be adjusted from other businesses' net profits before calculating taxable net profits. For example, you have gained Rs. 20,00,000 in 9 business but in 10th business, you have suffered loss of Rs. 40,00,000. At that time, your net loss will as Rs. 20,00,000 for income tax return purpose}

Comments

 


Name

access,2,account,86,accountant,95,Accounting,683,accounting definitions,99,accounting ebook,3,Accounting education,85,Accounting Education Ads Help,1,accounting procedure,2,accounting process outsourcing,2,Accounting Software,52,advance,3,advertising,6,africa,7,Amalgamation,6,amendments,16,Amortization,1,announcements,62,Annuity,2,assets,53,audit,47,auditing,41,Australia,2,B.Com.,22,balance sheet,87,bank,111,Bank reconciliation,12,banking,33,basic accounting,110,BBA,1,benefits,13,best,50,bill,12,black money,3,blog,12,bloggers,7,book keeping,4,bookkeeping,3,Branch Accounting - full tutorial,8,budget,35,Budget variance,13,business,65,businessman,9,CA,30,calculator,4,canada,3,capital,72,capital budgeting,27,career,21,cash,40,cash book,8,cash flow statement,11,Chiense,1,children,13,china,6,class,3,coaching,2,coins,2,college,6,commerce,10,commerce students,7,company,36,computer,9,computer accounting,1,conference,4,Contact vinod kumar,1,Control Your Spending,27,corporate accounting,69,cost,160,cost accounting,195,cost center,8,cost centre,1,CPA,2,credit,18,credit card,11,cs,10,currency,35,data,11,Debit and credit,17,debit cards,1,debt,62,debtor,21,degree,6,depletion,2,depreciation,38,Diwali Messages,12,documents,4,dollar,5,domain,3,Downloads,3,Dubai,1,e-accounting,17,earning,17,education,246,Education Loans,6,email,15,employee,4,EPF,2,ERP,7,euromoney,1,examination,7,excel,17,excise duty,6,expenses,65,facebook,7,factor of loan,1,fans,2,feature,32,fifo,5,FII,4,fiji,1,finacle,1,finance,823,Finance Journal Entries,6,Financial,134,financial accounting,147,Financial Statements,4,fire insurance,3,flickr,2,flow,4,forensic,4,forex,21,formula,8,france,1,fraud,6,free,2,fun,34,function,1,fund,48,GAAP,36,GDP,1,gdr,5,germany,1,gold,7,goodwill,4,goodwill accounting,3,google,34,google apps,3,google apps,1,google base,1,google buzz,1,google calendar,1,Google docs,38,google finance,3,google fusion tables,1,google talk,5,govt.,5,GST,33,guide,85,health,6,Hindi,2,Hindi Language,3,history,3,holding company,3,How to treat FBT in Tally 9,1,HRA,3,ICAI,11,ICAWI,3,ICICI Bank,1,IFRS,11,income,17,income statement,19,Income Tax,7,India,57,indian railway,1,Indonesia,1,inflation,4,inflation accounting,3,infographics,8,information,7,inspiration,176,insurance,14,insurance accounting,2,Intangible,3,interest,26,international,7,Internet,40,Introduction of Tally 9,1,inventory,41,investment,135,investment in Shares,6,invoice,3,IT,1,Japan,1,Job costing,4,journal entries,143,Journal Entries eBook Help,4,Kalculate,1,keyboard,3,kuwait,2,laptop,2,law,4,LBT,1,learning,36,lease,5,lecture,11,ledger,17,leducation,1,Leverage Analysis,7,liabilities,16,lifo,3,linkedin,1,loan,74,logical point,1,loss,5,loss of profit,1,M.Com.,5,m.phil,2,malaysia,3,management accounting,129,manual accounting,4,manufacturing account,1,market,11,marketing,3,mastercard,2,material,13,MBA,14,MCA,1,media,4,migration,2,mobile,9,money,61,ms word,3,ms. excel,14,multi currency in tally 9,1,Multicurrency Accounting,3,mutual fund,30,national security,1,new and sacrifice ratio,1,new york times,1,new zealand,1,news,1,NGO,5,nonprofit-accounting,6,North Georgia Mountains,1,Notification,1,NPV,17,NSE,1,odbc,2,office,10,oman,1,online application,2,online accounting,11,Online Accounting Course,5,otcei,1,pakistan,3,parents,3,Partnership,1,pay pal,3,pdf,4,Personal Finance,6,pie chart,1,pie chart of income,2,pnb,5,podcast,1,ppf,1,presentation,10,price,7,privacy policy,2,prof. vinod kumar,13,profit,24,profit and loss account,12,project management,11,provision,14,purchase,9,puzzles,2,quickbooks,2,Quote,22,quotes,42,quotes of svtuition,1,rating agency,2,ratio analysis,34,RBI,7,readers,13,real estate,13,rectification of errors,11,remote control,2,reports,10,reserves,8,responsibility accounting,4,retirement,2,revenue,3,Revenue reserves,2,review,7,risk,11,rupees,9,salary,5,sale,12,SAP,3,saudi arabia,1,saving,19,sbi,9,scholarship,2,school,1,SEBI,13,security,30,service tax,23,share,20,share trading,15,Shares,16,shri lanka,3,singapore,2,sms,6,social accounting,7,society,5,solution,219,South Africa,1,stock,24,stock exchange,22,structure,6,student,39,students,70,study,21,subsidiary company,2,svtuition,14,swiss bank,2,tally,100,tally 9,8,Tally 7.2,8,Tally 9,42,Tally.ERP 9,59,TallyPrime,1,tanzania,2,tax,94,Tax Accounting,30,TDS,15,teacher,62,teaching,112,technology,33,test,40,testimonial,15,testimonials,15,thailand,1,tips,60,trading,5,trading on equity,2,transaction,7,trend,12,trial balance,14,truthfulness,1,tuition,3,twitter,10,UAE,5,UGC - NET Commerce,13,UK,11,United Arab Emirates,1,university,9,usa,25,valuation,9,VAT,22,Video,36,Voucher and vouching,4,Wealth,8,wikipedia,25,working capital,29,youtube,14,
ltr
item
Accounting Education: Profit and Gains from Business and Profession as Per Income Tax Law
Profit and Gains from Business and Profession as Per Income Tax Law
http://3.bp.blogspot.com/-VdmkSmeY0-o/TvhM_TREgYI/AAAAAAAAHNA/VcBgJavt6RM/s1600/1425.PNG
http://3.bp.blogspot.com/-VdmkSmeY0-o/TvhM_TREgYI/AAAAAAAAHNA/VcBgJavt6RM/s72-c/1425.PNG
Accounting Education
https://www.svtuition.org/2011/12/profit-and-gains-from-business-and.html
https://www.svtuition.org/
https://www.svtuition.org/
https://www.svtuition.org/2011/12/profit-and-gains-from-business-and.html
true
2410664366776677676
UTF-8
Loaded All Posts Not found any posts VIEW ALL Reply Cancel reply Delete By Home PAGES Contents View All RELATED CONTENTS FOR YOUR LEARNING Topic ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share to a social network STEP 2: Click the link on your social network Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy