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PGBP (Section 28 to 44D), Part - 2 | Fast Track Quick Revision Income Tax - Taxation PDF Download

Section 35D. Amortisation of Preliminary Expenses
Eligible expenses : Incurred before COB (trial run) or incurred for extension / expansion of business.
a.	Preparation of feasibility report.	f.	Legal charges for drafting, printing of MOA & AOA.
b.	Conducting market survey or any other survey necessary for the business.	g.	Registration fees of a company paid to Registrar of Companies. (Stamp duty).
c.	Preparation of project report.	h.	Expenses and legal charges incurred in drafting, printing and advertising for prospectus.
d.	Engineering services relating to the business.	i.	Expenditure incurred on issue of shares or debentures like underwriting commission, brokerage. (Entire public issue expenses).
e.	Legal charges for drafting any agreement relating to the setting up or conduct of the business.	Note : What is not preliminary expenses. (a) Salary to employees (b) Rent of premises.(c) Interest

Applicability		Applicability
1.	Indian Company	5% of Cost of project or 5% of capital employed whichever is higher; or	}	lower 5
		Eligible expenses
2.	Other Residents	5% of Cost of project or Eligible expenses whichever is lower 5
Cost of project : All cost of assets		Capital employed : Share capital + long term loans

Section 37. General Deduction
1.	Expenditure is not covered u/s 30 to 36.	Losses covered u/s 28. E.g. Under valuation / Over valuation of stock.
2.	Expenditure is incurred wholly & exclusively for the purpose of business.	Expenditure incurred on EE’s.	Maintenance of assets.
		Expenditure incurred on clients	Expenditure incurred on reputation of organisation.
3.	Expenditure is not of capital in nature.	E.g. Public issue expenses is capital expenditure.	Note : Advertisement expenses incurred in a brochure of political party not allowed as deduction.
		E.g. Household expenses
4.	Expenditure is not personal nature.
5.	Expenditure should not be in nature of offence or prohibited by Law.	Payment of bribe, Penalty for infringement of law not allowed as deduction. Payment of ransom money, hafta is allowed as deduction.

		Business Expenditure	Personal Expenditure	Revenue Expenditure	Capital Expenditure	Whether allowed?
1.	Expenditure incurred on development of website	Yes	No	Yes	No	allowed
2.	Salary to Staff	Yes	No	Yes	No	allowed
3.	Expenditure incurred on issue of bonus shares	Yes	No	Yes	No	allowed
4.	Listing fees	Yes	No	Yes	No	allowed
5.	Rent of building which is owned by proprietor	Yes	Yes	Yes	No	Not allowed
6.	Interest on loan taken for payment of dividend.	Yes	No	Yes	No	allowed
7.	Income Tax / Wealth Tax	No	Yes	Yes	No	Not allowed
8.	Indirect Tax	Yes	No	Yes	No	allowed

Section 40A(2). Unreasonable payment to relatives / substantial interest

Unreasonable payment made to relative as determined by AO is not allowed as deduction. Market price shall be determined as per Arm’s Length Price. ALP is determined u/s 92C.

Section 40A(3). Cash Expenditure
Applicability	Non Applicability
Expenses in cash exceeding Rs. 20,000 in a single day to same person shall not be allowed as deduction.	1.	Payment made to Banks, FI, Govt
	2.	Payment made to farmers for its produce.
Note : For truck operator take Rs. 35,000.	3.	Payment made at a place not served by Bank.

Section 43B. Certain expenses deduction allowed on actual payment basis
Payment covered		Timing of Deduction
1.	Interest payment to banks	Payment before Due Date	Payment after Due Date
2.	Indirect tax payment to Govt.	In the year of accrual of expenses	In the year of payment
3.	ER’s contribution to PF, Gratuity Fund, Leave salary, Bonus & commission	Note : For payment not covered u/s 43B expenses deduction allowed on the basis of accounts main-tained by the assessee
4.	Payment made to railwaysfor use of railway assets

Section 44AD, 44ADA & 44AE. Presumptive basis of Taxation
Common points
1.	Section 30 to 44D is not applicable. It means further business deduction is neither allowed nor disallowed. Section 32(2) not applicable. Section 40 to 43B not applicable. Other income can be added to this income.
2.	Losses u/s 70 to 80 can be adjusted with this income.
3.	Deduction u/s 80C to 80U is allowed from this income.
4.	Administrative convenience.	a.	S 44AA & 44AB not applicable
		b.	Pay 100% advance tax by 31st March only S 44AD

	Section 44AD		44ADA	Section 44AE
Applicability	a.	Ind / HUF / Firm	Ind / Firm / LLP	a. Any person
	b	Resident	Resident	b. Resident / Non Resident
Turnover	upto Rs. 2 Crore		upto Rs. 50 Lakh	No such requirement instead total truck should not exceed 10 at any time during the PY.
Not applicable	Profession, Agency Business, Commission or brokerage income.			No such requirement
Presumptive income	8% of Turnover		50% of Gross receipts	Heavy Truck / Medium / Light	Rs. 7500 P.M.	during which truck is owned

	44AD	44ADA	44AE
30 to 36 40 to 43B	NA	NA	NA
Eligible assessee	Resident Ind/HUF/ Firm	Resident assessee	Resident / Non Resident assessee
Remuneration and interest to partners	Not Allowed	Allowed	Allowed
Advance Tax	100% on or before 15th March	4 Installment	4 Installment

Section 44AB. Compulsory tax audit
Profession	Gross receipts exceeds Rs. 50 Lakhs
Business	Turnover exceeds Rs. 1 Crore

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FAQs on PGBP (Section 28 to 44D), Part - 2 - Fast Track Quick Revision Income Tax - Taxation

1. What is the significance of Sections 28 to 44D in the Income Tax Act?

Ans. Sections 28 to 44D of the Income Tax Act pertain to various provisions related to taxation. These sections cover a wide range of topics such as taxation on income from business or profession, income from house property, capital gains, and income from other sources. They provide detailed guidelines on how these incomes are to be calculated, assessed, and taxed.

2. How can I determine the tax liability for income from business or profession under Sections 28 to 44D?

Ans. To determine the tax liability for income from business or profession, you need to calculate the net profit or loss from your business or profession as per the guidelines provided in Sections 28 to 44D. This involves deducting the expenses incurred in generating the income from the gross receipts. The net profit or loss is then subjected to the applicable tax rates as per the Income Tax Act.

3. What are the key provisions regarding taxation on income from house property under Sections 28 to 44D?

Ans. Sections 28 to 44D provide provisions for the taxation of income from house property. Key provisions include the determination of annual value of the property, allowable deductions such as municipal taxes and standard deduction, and computation of income from house property. These sections also outline the treatment of self-occupied and let-out properties for tax purposes.

4. How are capital gains taxed under Sections 28 to 44D?

Ans. Capital gains are taxed under Sections 28 to 44D. These sections provide detailed provisions for the taxation of gains arising from the transfer of capital assets such as property, shares, or securities. The tax treatment depends on whether the asset is held as a short-term capital asset or a long-term capital asset. The rates of taxation and available exemptions or deductions differ for each category.

5. What does Section 44D of the Income Tax Act cover?

Ans. Section 44D of the Income Tax Act covers the presumptive taxation scheme for eligible professions. Under this scheme, professionals such as doctors, lawyers, architects, etc., can declare a presumptive income based on a certain percentage of their gross receipts. This scheme simplifies the tax compliance process for professionals and provides them with certain benefits such as exemption from maintaining detailed books of accounts.

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