BLOG on Income Tax Management for - AY 2022-23 & 2023-24

BUSINESS OR PROFESSION- Direct Taxes

1-Incomes Chargeable to Income-Tax under "Profits and Gains of Business or Profession" [Section 28]

The following incomes shall be chargeable to income-tax under the head "Profits and gains of business or profession":

2- Expenses Allowed as a Deduction [Section 30 to 37] for computing Income under 'Profit & Gains of Business or Profession'

Rent, Rates, Taxes, Repairs and Insurance for Buildings [Section 30], Repairs and Insurance of Machinery, Plant and Furniture [Section 31], Depreciation [Section 32], Deduction in respect of Investment in New Plant and Machinery in notified backward areas in certain States [Section 32AD], Deduction on Tea Development Account, Coffee Development Account and Rubber Development Account [Section 33AB], Deduction on Site Restoration Fund [Section 33ABA], Deduction on Expenditure on Scientific Research [Section 35]….

3. Amounts Not Deductible [Section 40] for computing Profits & Gains of Business or Profession

Notwithstanding anything contained in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head profits and gains of business or profession.

4. Rule 6DD – Exception to the [Section 40A(3)(a)] Payment in excess of Rs. 10,000 - for Computing Profits and Gains of Business or Professions

Rule 6DD prescribes the following Cases or Circumstances in which payment in excess of Rs. 10,000 may be made otherwise than by an Account Payee Cheque or Demand Draft. So no Disallowance will be made of the Expenditure even if the payment exceeding Rs. 10,000 otherwise than by an Account Payee Cheque or Demand Draft.

5. Certain Deductions to be Allowed only on Actual Payment [Section 43B] - for Computing Profits and Gains of Business or Professions

In respect of certain following expenditure/ payments, the deduction is allowed only if the amount has been actually paid during the previous year.

6. Block of Assets on the basis of Class of Assets and Rates of Depreciation - for Computing Profits and Gains of Business or Professions

"Buildings" - Block of Assets with Rate of Depreciation, "Furniture and Fittings" - Block of Assets with Rate of Depreciation, "Machinery and Plant" - Block of Assets with Rate of Depreciation, "Intangible Assets" - Block of Assets with Rate of Depreciation.

7. Notional Actual Cost of Assets [Section 43(1)] - for Computing Profits and Gains of Business or Professions

Notional Actual Cost of Assets [Section 43(1)] - for Computing Profits and Gains of Business or Professions

8. Carry Forward and Set Off of Unabsorbed Depreciation [Section 32(2)] - for Computing Profits and Gains of Business or Professions

Where in the assessment of the assessee, full effect cannot be given to any depreciation allowance in any previous year owing to—

9. Deemed Profits chargeable to Tax as Business Income [Section 41 and 176(3A) & (4)]

By virtue of section 41, the following receipts are chargeable to tax as business income notwithstanding that the business or profession to which the receipts relate ceased to be in existence in the year in which they are received:

10. Maintenance of Accounts by certain persons carrying on Profession or Business [Section 44AA and Rule 6F]

A Person carrying on certain Professions [Section 44AA(1)], Person carrying on a Non-Specified Profession or carrying on Business [Section 44AA(2)]

11. Compulsory Audit of Accounts [Section 44AB]

Every person carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed Rs. 1 crore in any previous year, get his accounts of such previous year audited by a Chartered Accountant before the "Specified Date" and furnish by that date the report of such audit in the prescribed form, duly signed and verified, by such accountant and selling forth such particulars as may be prescribed.

12. Estimated or Presumptive Income method for Computing Business Income [Section 44AD, 44ADA, 44AE]

To give relief to small taxpayers from the tedious job of maintenance of books of account and from getting the accounts audited, the Income-tax Act has framed the presumptive taxation scheme under sections 44AD, section 44ADA and section 44AE. In this part you can gain knowledge about various provisions of the presumptive taxation scheme of section 44AD, section 44ADA and section 44AE.

BUSINESS OR PROFESSION- Direct Taxes

1-Incomes Chargeable to Income-Tax under "Profits and Gains of Business or Profession" [Section 28]

2- Expenses Allowed as a Deduction [Section 30 to 37] for computing Income under 'Profit & Gains of Business or Profession'

3. Amounts Not Deductible [Section 40] for computing Profits & Gains of Business or Profession

4. Rule 6DD – Exception to the [Section 40A(3)(a)] Payment in excess of Rs. 10,000 - for Computing Profits and Gains of Business or Professions

5. Certain Deductions to be Allowed only on Actual Payment [Section 43B] - for Computing Profits and Gains of Business or Professions

6. Block of Assets on the basis of Class of Assets and Rates of Depreciation - for Computing Profits and Gains of Business or Professions

7. Notional Actual Cost of Assets [Section 43(1)] - for Computing Profits and Gains of Business or Professions

8. Carry Forward and Set Off of Unabsorbed Depreciation [Section 32(2)] - for Computing Profits and Gains of Business or Professions

9. Deemed Profits chargeable to Tax as Business Income [Section 41 and 176(3A) & (4)]

10. Maintenance of Accounts by certain persons carrying on Profession or Business [Section 44AA and Rule 6F]

11. Compulsory Audit of Accounts [Section 44AB]

12. Estimated or Presumptive Income method for Computing Business Income [Section 44AD, 44ADA, 44AE]

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