Can any one tell me what is meant by first three inadmissible deduction written in ITO in the head BUSINESS INCOME !!
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Hi,
First of all...the basic thing to understand is for what amounts we can claim deductions...
We can claim deductions only for that expenses which we have incurred for the purposes of business...
The first inadmissible deduction is any tax levied on the profits or gains of the business...example is income tax...one cannot claim deduction in respect of the income tax that he has paid...
Its not a business Expense...
The 2nd inadmissible deduction is the amount of income tax deducted at source...againn its not a business Expense...
The 3rd inadmissible deduction is that business expense that we incure wihtout deducting tax at source...
Example...When we pay salaries to our business staff...it is a business expense...so we can claim deduction in respect of salaries...but we have to pay salaries to our employees after deducting tax...it will be inadmissible if we donot deduct tax...
in other words we have to pay salaries net of tax...
Ace
VERY IMPORTANT POINT
In case of AOPs' (business income), the following amounts are also inadmissible deductions.i.e;
i) Salary;
ii) Brokerage;
iii) Commission;
iv) Interest; or
v) Any other remuneration to the partners of AOP.
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