Business:

Any activity with intention and motive to earn profit.

For Tax Purpose Business includes, any trade, commerce, manufacture, profession,
vocation or adventure or concern in the nature of trade commerce, manufacture,
profession or vocation, however it does not include an employment.

TYPES OF BUSINESS
1.Non-Speculation Business/Normal business 2.Speculation Business

Non Speculation: Sales & Purchase contracts are settled by transfer of commodity
Speculation: Sales & Purchase contracts are settled other than by transfer of
commodity.

Business Income/Scope of Business Income/Income Chargeable under

Business
1. Profits & Gains of any business carried on or treated to be carried on during
the tax year.
2. Income from sale of goods or provision of services to its members by any
trade, professional or similar association.
3. Fair market value of any benefit or perquisites arising from the past, present
or prospective business relationship. It may or may not be convertible into
money.
4. Income from the hire or lease of tangible movable property.
5. Management fee derived by a management company
6. Any benefit on debt, in case of a person whose business is to lend money and
earn profit on debt.
Leasing Income (18-3)
1. Where a person (lessor) has leased out any asset to any other person
(lessee), then the amount paid or payable by lessee shall be chargeable to
tax under head of business income. The lessor should be any of the following.
a) A schedule bank
b) An Investment bank
c) A development finance institution
d) A modarba
e) A leasing company
Whether the asset owned by the lessor or not, the amount received or
receivable will be charges under head of business income.
Income from Mutual Fund (18-4)
Any amount received by a banking company or a non-banking finance
company , where such amount represents distribution of a mutual fund or private
equity and venture capital fund out of its income from profits on debt shall be
chargeable to tax under the head income from business.

SPECULATION BUSINESS
Means a business in which a contract for the purchase and sale of any commodity
(including stocks & Shares) is periodically or ultimately settled otherwise then by
actual delivery or transfer of the commodity.
Treatment of Speculation business
 1. Income of Speculation business will be computed under the head of
Speculation business
2. If, there is some taxable income under the head of speculation business, it
will be transfer to non-speculation business to compute tax liability.
3. In case of loss in Speculation business, it will be adjusted only against the
speculation business income rather than transferring to Non-Speculation
business.
ADMISSIBLE EXPENSES
While computing the income under the head “Income from business” certain
expenses are allowed as deductions.
1. All expenses to generate income are allowable.
2. Depreciation and amortization on assets
3. Amalgamation expenses incurred by an amalgamation company.
INADMISSIBLE EXPENSES
1. Any tax/cess/expenses based on percentage of profit.
2. Any provisions
3. Any expenses liable to deduct and deposit withholding tax but paid without
deduction of tax.
4. Any salary exceeding Rs.15,000/- P.M. other than through banking channel.
5. Any payment to non-resident without deduction and deposit of withholding
tax
6. Any payment on account of salary, profit on debt, brokerage, commission,
any remuneration (other than rent) by AOP to its members.
7. Any fine or penalty
8. Any contribution to unrecognized fund
9. Any entertainment expenses exceeding the prescribed limit.
10.Any expenditure under the single head transaction exceeding Rs.50,000/-
other wise than cross cheque.
11.Any expenditure of capital nature.
12.Any personal expenses incurred by the person.
13.However, this clause shall not apply to expenses upto Rs.10,000/- and
expenses on account of utilities bill, any tax or other payments having
documentary evidence
st
1 Schdeule
Rate of Taxes
2nd Schedule
Exemptions & Tax Concessions
3rd Schedule
Depreciation, Initial allowance & Pre-Commencement allowance
4th Schedule
Rules for Computation of Profits & Gains of Insurance Business
5th Schedule
Rules for Computation of Profits & Gains of Petroleum & Minerals
th
6 Schedule
Recognized Provident Fund, Gratuity
7th Schedule
Rules for Computation of Banking Company & Tax Payable thereon