PGBP

Kirron Bindu
 Format for Computation of Taxable Profit

• Net Profit as Per Profit and Loss Account ( given )

• Add: Amount Debited to P&L a/c in respect of following
A) Any expenses or Loss not related to business Personal Expenses
B) Expenses not related to PY
C) Losses of Earlier Years
D) Capital Losses
E) Capital Expenses
F) Personal Expenses such as drawings , Life Insurance Policy
G) Income Tax, tax penalty , penal interest
H) Charity and Donation ( other than Business Association )
I)Gifts and Presents to Friends and Relatives
J) All reserves/Provisions such as tax prov, bad debts, prov for Depreciation
K) All Expenses related to Other heads of Income
L) Business Income not credited to P&L a/c
M) Undervaluation of Closing stock and Overvaluation of Opening Stock
• Deduct from P&L a/c if credited in respect of following
• A) Expenses and Losses allowed but not debited to P&L a/c
• B) Income from salary credited to P&L a/c
• C) Residential Income From House Property credited to P&L a/c
• D) Capital Gain Credited in P&L a/c
• E) Dividend ,Interest any Other Income from Other Sources credited in P&L a/c
• F) Exempted Income ( agricultural Income, Income from HUF, Firm , AOP)
• G) Direct Taxes refund
• H) Bad Debts, GST recovered not allowed as expenditure in preceding year
received in previous year.
• I) Overvaluation of Closing Stock and Undervaluation of Opening Stock
 Problem 1 : Compute the PGBP
Dr Cr
• Particulars Amt • Particulars Amt
• To Salaries 2,00,000 By Gross Profit b/d 20,00,000
• “ Rent 10,000 “ Interest Received 50,000
• “ Depreciation 25,000 “ Dividend Received 25,000
• “ Household Exp 50,000 “ Profit on Sale of House 50,000
• “ Loss on Sale of Car 1,00,000 “ Share from Firm 1,00,000
• “ GST 10,000
• “ Bad-debts Provision 30,000
• “ Repair of house 20,000
• “ Bad Debts 15,000
22,25,000
• “ Income Tax 80,000
• “ Interest on Capital 15,000
• “ Net Profit 16,70,000
22,25,000
• Net Profit As Per P/L a/c 16,70,000
Add: Amount Debited to PL a/c in respect of following
Household Expenses : 50,000
Loss on Sale of Car : 1,00,000
Bd Debt Prov : 30,000
Repairs of House : 20,000
Interest on Capital : 15,000
Income Tax : 80,000 2,95,000
Less: Amounts Credited to P&L in respect of following
Interest Received : 50,000
Dividends Received : 25,000
Profit on Sale of House : 50,000
Share From Firm : 1,00,000 2,25,000
Profits and Gains From Business and Profession 17,40,000
 Computation of Income from Business of Mr Prasad.
PY – 2019-2020
AY – 2020-2021
Net Profit as Per P&L a/c 2,30,000
Add: Disallowable expenses/ Unrecorded Income :-
Personal Expenses & gift to daughter 5,000
Donation ( marriage ) 2,100
Fixed Deposit 50,000
Telephone Expenses ( Personal Call )1,000
Machinery Rent 25,000 83,100
Less: Disallowable Income / Unrecorded Expenses:-
Salary ( Chargeable under different head) 36,000
Rent from Subletting of Machinery 39,000 75,000
Profit and Gains From Business 2,38,100
Computation of Income from Business of Mr Pramod
Patil
PY- 2019-2020
AY- 2020-2021
• Net Profit as per P&L a/c 1,59,000
Add: Disallowable Expenses / Unrecorded Income
Salary Paid to Proprietor 3000
Insurance ( for Life Insurance) 2000
Printing and Stationary ( Personal use) 3000
Reserve for Bad Debts 9000
Securities Transaction Tax 2000
Professional Tax 2500 21500
Less: Disallowable Income/ Unrecorded Expenses
Cash Embezzeled by employee 6000
Actual Bad Debt 4000
Rent from HP 60000
Dividend from Indian Company 10000
Profit on Sale of Machinery 45000
Interest on NSC 5000 130,000
Profit From Business 50,500