Dear Chartered accountants,format of computation of income from business first of all we are taking the net profit of p&l statement
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1. Add: expenses debited to statement of profit and loss but not allowable
2.Less: expenditure allowable as deduction but not debitted to statement of profit and loss
3.Less: income credited in statement of profit and loss but not taxable/taxable under any other head
4: Add: deemed income
could you please explain me this four concepts??? how can I identify please guide me
As per Income tax act, while computing net Taxable Income under the head Business and profession, Certain expenses are allowed and certain are not allowed as deduction debited to P&L account
Similarly Certain Income credited to profit and loss account but not taxable under head business and profession should be deducted from net profit.
So as per your query
1. Add all expenses to the net profit debited to p&L ,which are not allowed as deduction as per income tax act
2. Less all expenses from the profit that are allowed as deduction as per the Income tax act ( section 30 to 43D of the Income tax act)
3. Less Income credited to profit and losss but not Taxable to other head ,should bededucted from the Profit.
4. You have to add Deemed Income which is taxable under head business and profession but not credited to profit and losss account.
After add and less as above we arrived at Income chargeable under Business and profession as per the Income tax act.
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