Business or Professions

Complete Guide on Depreciation as per Income Tax – Section 32

If you don’t know what is depreciation then you can read about it here – What is depreciation and common methods/types of depreciation. Basics of Depreciation Depreciation is allowable as expense in Income Tax Act, 1961 on basis of block of assets on Written Down Value (WDV) method. Depreciation on Straight

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Depreciation rates as per I.T Act for most commonly used assets

Rates has been changed for financial year 2017-18 and onwards. Now the maximum rate of depreciation is 40%. S No. Asset Class Asset Type Rate of Depreciation     1. Building Residential buildings except hotels and boarding houses 5% 2. Building Hotels and boarding houses 10% 3. Building Purely temporary

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Remuneration and Interest to Partner – Section 40b

Section 40b determines the maximum amount of remuneration and interest on capital payable to a partner under Income Tax Act. The amount over the specified limit is not allowed as a deduction to a partnership firm. Remuneration to Partners Remuneration includes salary, bonus, commission .Remuneration in partnership firm is allowed

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General Deductions – Section 37

Any expenditure not covered by section 30 to 36 is deductible under section 37, subject to the following conditions It should not be a capital expenditure It should not be personal expenses of the assesse It should be incurred wholly and exclusively for the purpose of business or profession It

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Section 44AD – Profits Calculated on Presumptive Basis

Eligible Assessee A resident individual, resident HUF, resident partnership firm but not a limited liability partnership firm. Who has not claimed deduction under any of the sections 10A, 10AA, 10B, 10BA, or deduction under any provisions of section 80-IA to 80RRB in the relevant assessment year.  The following persons are

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Audit of Accounts – Section 44AB

The following persons are required to get their accounts audited by a practicing Chartered Accountant – (a) A person carrying on business If the total sales, turnover, gross receipts exceeds Rs. 1 crore in the relevant year. If a person files his return under section 44AD and his turnover is

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Section 44AA – Maintenance of Accounts

Case – I Persons carrying on specified profession Specified profession – Profession of legal, medical, engineering, architectural, accounting, technical consultancy, interior decoration, film artist or authorised representative. Persons carrying on a specified profession and his gross receipts exceed Rs. 1,50,000 in all the three immediately preceding years or in case

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Deduction of Deficiency – Section 44A

As per the principle of mutuality, any income arising to a trade, professional or similar association does not partake character of income and thereby not taxable. However if deficiency arises, then it is allowed in accordance with provision of this section. Meaning of Deficiency – Amount received during a previous

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Amounts not Allowed as Deduction – Section 40a

The following amount shall not be allowed as a deduction in computing the income chargeable under the head Profit & gains of business or professions: – Any interest, royalty or fees for technical services or any other sum chargeable in the hands of the recipient under the Act which is

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