by The Income-tax Act, 2025 provides several specific deductions while computing PGBP income. Sections 29–30 allow deductions for employer contributions toward employee welfare funds and certain insurance premiums. Section 33 governs depreciation on business assets, computed on the block of assets defined under Section 2(17). Section 45 permits deduction for scientific research expenditure connected with the business, covering both capital and revenue outlay, subject to prescribed conditions.
1. Deduction in Respect of Employee Welfare [Sec. 29 & 30]
Section 29 allows an employer deduction for sums paid toward a recognised provident fund, approved superannuation fund, contributions to a pension scheme (up to 14% of salary, including dearness allowance), and an approved gratuity fund created under an irrevocable trust, along with provisions made for gratuity payable during the tax year. Section 30 separately allows deduction for insurance premium paid on stocks/stores against damage, on cattle life by federal milk co-operatives, and on employee health insurance (via non-cash modes) under schemes approved by GIC or an IRDA-approved insurer, promoting comprehensive employee and asset welfare coverage.
2. Depreciation [Sec. 33]
Section 33 allows deduction for depreciation on tangible assets (buildings, machinery, plant, furniture) and specified intangible assets (know-how, patents, copyrights, trademarks, licences, franchises excluding goodwill) acquired on or after 1 April 1998, where owned wholly or partly and used wholly and exclusively for business. Depreciation is computed at a prescribed percentage of the written down value of the relevant block of assets. Where an asset within a block is partly used for business, the deduction is proportionately restricted. Assets used for less than 180 days in the tax year of acquisition are restricted to 50% of the prescribed rate.
3. Block of Assets [Sec. 2(17)]
The term “block of assets”, as defined under Section 2(17), refers to a group of assets falling within the same class being either buildings, machinery, plant, or furniture, or specified intangible assets in respect of which the same rate of depreciation is prescribed. Instead of computing depreciation asset-by-asset, the Act adopts this pooled approach, where additions and deletions during the tax year adjust the block’s written down value collectively. This concept simplifies depreciation computation, capital gains treatment on block disposal, and consistent tracking of asset groups across tax years.
4. Scientific Research [Sec. 45]
Section 45 allows deduction for expenditure — capital (excluding land acquisition) or revenue incurred on scientific research related to the assessee’s business. Additionally, expenditure incurred within three years preceding commencement of business, on salary to research employees or purchase of materials, is also deductible in the year of commencement. Where such capital expenditure is represented by an asset, ordinary depreciation under Section 33 cannot additionally be claimed on it. Disputes on whether an activity qualifies as scientific research are referred to the Central Government or a prescribed authority, whose decision is final.
