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Head of Income: Profits and Gain from Business and Profession

 Head of Income: Profits and Gain of Business and Profession





Section 23 is called Profits and Gains of Business and Profession. 

        The following incomes shall be chargeable to income tax under "Profits and Gains of Business or Professions":

  1. Profits and gains of any business or profession
  2. Any compensation or other payment due to received by any person specified in Section 28(ii)
  3. Income of Trade or Professional Association
  4. Profit on sale of import license
  5. Cash assistance received or receivable against export
  6. Duty drawback of customers and central excise duty
  7. The value of any benefit or prerequisite received by a person either in connection with his business activities or in the course of his professional services
  8. Any interest salary, commission,, bonus or remuneration  received by a partner from firm
  9. Any sum received for not carrying out any activity in  relation to any business or not to share any know-how, patent, trademark, copyright, etc.
  10. Any sum, including bonus, received under the Keyman Insurance Policy
  11. Income from speculative business
  12. Interest on securities, if securities are kept as stock-in-trade.
Tax Act while computing income from business and profession
Expenses that are disallowed by the Income Tax Act

Amount not deductible (Section 40): The following amounts shall not be deducted in computing the income chargeable under the head "Profits and Gains of Business or Profession".

Advertisement expenses [Section 37(2B)]
No deduction is allowed in respect of expenditure incurred by an assessee on the advertisement in any souvenir, brochure, tract, or pamphlet published by a political party.

In the case of any assessee [Section 40(a)]

Payment outside India
Any interest, royalty, fee for technical services or other sums chargeable under this Act, which is payable outside India or in India to a  non-resident or a foreign company on which tax is deductible at source but has not been deducted at source or after deduction has not been paid during the previous year opr in subsequent year with in subscribed time shall not be allowed as a deduction.

                        However, if in respect of such sum tax has been deducted or paid in a subsequent year, after the prescribed time such sum shall be allowed as deduction in computing the income of the previous year in which tax has been paid.

Payment to residents
(a) Any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resident.

(b) Amount payable to a resident contractor or sub-contractor for carrying out any work, on which tax is deductible at source and such tax has not been deducted or, after deduction has not been allowed as the due date specified in Section 139(1) it shall be not allowed as deduction.

(c) Salary paid outside India
        Like the first item, any salary paid by the assessee outside India or to a non-resident and the tax has not been paid thereon nor deducted at source is disallowed.

(d) Payment to a fund 
    Any payment to a provident fund or other fund established for the benefit of the employee will be disallowed, if an effective arrangement for deduction of tax at the source has not been made from the payment from the fund which is chargeable to tax under the head "Salaries".

(e) Payment of taxes
    If the assessee has paid any tax on profits on the business assets, such payments are not allowed as deductions.

(f) Tax on prerequisites of employee
    Tax actually paid by an employer on the value of prerequisite provided to an employee which is exempted u/s 10(10CC) is not allowed as deduction.

Conclusion

From the above discussion, we see that there are various provisions regarding capital gains. The Act is beautifully crafted in a very meticulous manner. We see that today there is a wide debate going on regarding the taxability of cryptocurrency under the head of Capital Gains or under PGBP.
        What would be your opinion regarding the taxability of cryptocurrency under the head of capital gains or PGBP, share in the comments below...

Signing off...

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