Income From Business - Definition and Inadmissible Expenses
Define income from business? What expenses are not admissible for tax purpose under the head business? OR Explain in-admissible deductions under the head income from business?
Business:
“Business includes any trade, commerce, manufacture, profession, vocation or adventure or concern or in the nature of trade, commerce, manufacture, profession, vocation but does not include employment”
IN-ADMISSIBLE EXPENSES/DEDUCTIONS
Certain expenses have been charged to the profit and loss account by a business entity. But these business expenses are not admissible for the purpose of taxation. So these expenses will be add back to the net profit of the business to find out taxable profit. Following are some examples of un-admissible expenses.

Income from business-section-18
Income from business is a 3rd source of income from which a person can derive income. Income from business is chargeable to tax under section-18 of income tax ordinance 2001.Let us define business and then income from business.Business:
“Business includes any trade, commerce, manufacture, profession, vocation or adventure or concern or in the nature of trade, commerce, manufacture, profession, vocation but does not include employment”
IN-ADMISSIBLE EXPENSES/DEDUCTIONS
Certain expenses have been charged to the profit and loss account by a business entity. But these business expenses are not admissible for the purpose of taxation. So these expenses will be add back to the net profit of the business to find out taxable profit. Following are some examples of un-admissible expenses.
- Cess Rates or Tax
- Sum paid to Non Resident
- Remuneration to Member By AOP
- Fine or Penalty Paid
- Personal Expenditures
- Entertainment Expenses
- Capital Nature Expenditures
- Salary Excess Rs 15,000 P.m. In Cash
- Contribution to un-approved funds
- Employer’s Contribution to fund
- Limitation on prerequisites
- Appropriation of funds
- Payment exceeding Rs 5,000 pain in cash
- A) Expenditure not exceeding ten thousands rupees.
- B) Expenditures on account of Utility Bill, Freight Charges, Travel Fair, Postage.
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