PRESTIGE INSTITUTE OF MANAGEMENT AND RESEARCH, INDORE

(An Autonomous Institution Established in 1994, Accredited with Grade ‘A++’ NAAC (UGC) ISO 9001: 2008 Certified Institute, AICTE / UGC Approved Programs affiliated to DAVV, Indore)

TAX PLANNING AND MANAGEMENT

2022-2024
GROUP – 5
Submitted By - Submitted To -
Aman Patel -1121214725 CA Deepti Jain
Abhash Singhai -1121214480
Akanksha Patidar -1121214893
Mahima Singh -1121214898
Rakesh Randhawe -1121214883
 PROFIT AND GAINS
OF
BUSINESS OR PROFESSION
 INTRODUCTION:
Income from business and profession refers to the financial returns earned through commercial
activities or professional services. In the business context, income is generated from trading,
manufacturing, or providing services. It includes various types of profits, such as gross,
operating, and net profits, reflecting the surplus after deducting relevant costs. Professionals,
engaged in specialized fields like law, medicine, or consultancy, earn income through their
expertise. This income is subject to taxation, and tax liability is calculated based on the net profit
after considering allowable deductions and exemptions. Proper financial record-keeping is
essential for tax compliance and evaluating the financial health of both businesses and
professional practices.
FORMAT OF PROFIT & LOSS A/C
AND
INCOME & EXPENDITURE A/C
 Profit & Loss Account or Income & Expenditure Account
Net profit as per the P&L Account
or
Net Surplus as per Income & Expenditure Account
Add: Disallowed Expenses included directly or indirectly in debit side of P&L account
1.Any type of donation, charity, gift ect. Which not related to business or profession -

2. Personal gifts, present, or assistance. -

3. Income tax. -

4. Personal Expenses, domestic expenses, drawings, expenses on relatives. -

5. Any other expenses with is not related to business or profession is to be added. - -

Less: Allowed Expenses:

1. Allowed Depreciation. -

2. Allowed bad debts. -

3. Due bonus to employees. - -

Add: Allowed Income:

1. Any kind of income which allowed and not shown in the P&L or Income & expenditure account. - -

Less: Disallowed Income:

1. Any Kind of Incomes and receipts which are not related to business or profession. -

2. Rent from property. -

3. Interest & Dividend from Investments. -

4. Personal Gifts. - -

Taxable Income from Business or Professions …..................

 Profit & Loss Account or Income & Expenditure Account
Net Surplus as per Income & Expenditure Account 4,52,600
Add: Disallowed Expenses included directly or indirectly in debit side of P&L account
1.Personal Expenses 6,000
2. Car Purchased 2,90,000
3. Muncipal Tax(2,000 x 2/3) 1,333
4. Donation to N.D.F 4,000
5. Computer Purchased 18,600
6. Furniture Purchased 4,000
7. Books Purchased 9,000
8. Repairs(5,000 x 2/3) 3,333
9. Life Insurance Premium 3,700
10. Telephone Expenses(2,000 x 30%) 600 3,40,566

Less: Allowed Expenses:

1. Depreciation on Car -42,900
2. Depreciation on Books -3,600
3. Depreciation on Computer Purchased -7,440
4. Depreciation on Professional Assets -8,000 -61,940

Add: Allowed Income:

1. Nil - -

Less: Disallowed Income:

1. Old Car Sold -1,32,000
2. Salary as a part time lecture -45,000
3. Interest on bond F.D.R -9,000 -1,86,000

Taxable Income from Business or Professions 5,45,226

 WORKNIG NOTE:
CALCULATION OF DEPRECIATION ON CAR
Depreciation on Car

Amt

Written Down Value 1,28,000

Add: New Car Purchased 2,90,000
Less: Old Car Sold -1,32,000
Amount Eligible for Depreciation 2,86,000
Depreciation Rate 15%
Depreciation Allowed(2,84,000 x 15/100) 42,900
 Profit & Loss Account or Income & Expenditure Account
Net Surplus as per Income & Expenditure Account 4,52,600
Add: Disallowed Expenses included directly or indirectly in debit side of P&L account
1.Personal Expenses 6,000
2. Car Purchased 2,90,000
3. Muncipal Tax(2,000 x 2/3) 1,333
4. Donation to N.D.F 4,000
5. Computer Purchased 18,600
6. Furniture Purchased 4,000
7. Books Purchased 9,000
8. Repairs(5,000 x 2/3) 3,333
9. Life Insurance Premium 3,700
10. Telephone Expenses(2,000 x 30%) 600 3,40,566

Less: Allowed Expenses:

1. Depreciation on Car -42,900
2. Depreciation on Books -3,600
3. Depreciation on Computer Purchased -7,440
4. Depreciation on Professional Assets -8,000 -61,940

Add: Allowed Income:

1. Nil - -

Less: Disallowed Income:

1. Old Car Sold -1,32,000
2. Salary as a part time lecture -45,000
3. Interest on bond F.D.R -9,000 -1,86,000

Taxable Income from Business or Professions 5,45,226

CALCULATION OF DEPRECIATION ON BOOKS Amt
Books 9,000
Depreciation Rate 40%
Depreciation Allowed 3,600

CALCULATION OF DEPRECIATION ON COMPUTERS Amt

Computer Purchased 18,600
Depreciation Rate 40%
Depreciation Allowed 7,440
 Profit & Loss Account or Income & Expenditure Account
Net Surplus as per Income & Expenditure Account 4,52,600
Add: Disallowed Expenses included directly or indirectly in debit side of P&L account
1.Personal Expenses 6,000
2. Car Purchased 2,90,000
3. Muncipal Tax(2,000 x 2/3) 1,333
4. Donation to N.D.F 4,000
5. Computer Purchased 18,600
6. Furniture Purchased 4,000
7. Books Purchased 9,000
8. Repairs(5,000 x 2/3) 3,333
9. Life Insurance Premium 3,700
10. Telephone Expenses(2,000 x 30%) 600 3,40,566

Less: Allowed Expenses:

1. Depreciation on Car -42,900
2. Depreciation on Books -3,600
3. Depreciation on Computer Purchased -7,440
4. Depreciation on Professional Assets -8,000 -61,940

Add: Allowed Income:

1. Nil - -

Less: Disallowed Income:

1. Old Car Sold -1,32,000
2. Salary as a part time lecture -45,000
3. Interest on bond F.D.R -9,000 -1,86,000

Taxable Income from Business or Professions 5,45,226

 OLD TAX REGIME Amt
Taxable Income 5,45,226
Tax Rate upto 2.5 Lakhs -
Tax Rate 2.5 Lakhs - 5 Lakhs 5%
(2,50,000 x 5/100) 12,500
Tax Rate 5 Lakhs - 10 lakhs 20%
(45,226 x 20/100) 9,045
Tax liability 21,545
Add: Surcharge -
Total Tax Liability 21,545
Add: Cess 4%
Final Tax Liability 22,407

New TAX REGIME Amt

Taxable Income 5,45,226
Tax Rate upto 3 lakhs -
Tax Rate 3 lakhs - 6 laksh 5%
Tax liability (2,45,226 x 5/100) 12,261
Add: Surcharge -
Total Tax Liability 12,261
Add: Cess 4%
Final Tax Liability 12,752
THANK
YOU