Deductions/Inclusions - Income from Business

1. Recovery Bad Debts - if included earlier as expenses for tax purposes, include in calculating income.

2. Provision for Bonus - Bonus provision to the extent of 10% is deductible during the income year during which the provision is made. Allowable Bonus = 10% of profit before taxes but after bonus.

3. Inclusion of Bonus - If Approval of GON is not required for the distribution, such bonus has to be distributed next year, the amount not distributed shall be included in the employers income in that FY. If approval of GON is required, such bonus has to be distributed during the year in which approval was obtained, if could not distribute in that year, include in the income of such year.

4. Loss from Sale of Business Assets - As per section 7 net gains from disposal of business assets is included in the income from business. Net gains from disposal of business is given in section 36, where is it stated that, Net Gains from the disposal of Business Assets = Gains from disposal of business assets in a year - Losses from disposal of business assets in a year - Unrelieved Losses from the disposal of business assets in that income year and previous years.

5. Retirement Payments - Retirement payments made to an employee are deductible expenses u/s 13. Retirement contributions made to a approved fund or unapproved fund are also deductible if made from company's own funds(i.e. employers contribution). Retirement Payment made to a shareholder would be treated as a distribution of profit and not deducted.