Allowable Expenses u/s. 30 to 37

30/04/2021 1 By indiafreenotes
  • Rent, rates, taxes, repairs and insurance for owned buildings as well as buildings taken on rent (Section 30)

It is to be noted that the above-mentioned expenditure shall not be the Capital Expenditure.

  • Repairs and insurance of machinery, plant and furniture (Section 31)

 It is to be noted that the above-mentioned expenditure shall not be the Capital Expenditure.

  • Depreciation on capital assets (Section 32):

All assessee can claim the depreciation on capital assets as deduction under this section. The condition to claim the deduction is :

(i) Asset must be owned by the assessee or if asset is on lease then assessee can claim the depreciation on cost incurred upon the improvement or renovation etc.

(ii) Asset must be used for business purpose, if asset is used partly for residential purpose and partly for business purpose, then deduction available of depreciation on asset use for business purpose.

  • Expenditure on Scientific Research (Section 35)
  • Amortisation of preliminary Expenses (Section 35D):

If an Indian company or resident non-corporate assessee have incurred some expenses before the commencement of the business is eligible to take deduction after the commencement of the business by amortised the amount in each year.

  • Premium paid in respect of insurance against risk of damage or destruction of stocks / stores used for business or profession [Section 36(1)(i)]
  • Medical Insurance paid by the employers [Section 36(1) (ib)]
  • Bonus or commission paid to employees [Section 36(1)(ii)]
  • Interest on borrowed Capital [Section 36(1)(iii)]:

If an assessee has taken the business or profession loan, then he is eligible to take the deduction of interest amount paid on such borrowing under this section.

  • Contributions to recognized provident fund and superannuation fund [Section 36(1)(iv)]
  • Contributions to approved gratuity fund [Section 36(1)(v)]
  • Employees contributions to staff welfare schemes [Section 36(1)(va)]
  • Bad Debts [Section 36(1)(vii)]
  • Banking Cash Transaction Tax [Section 36(1)(xiii)]
  • Securities Transaction Tax [Section 36(1)(xv)]
  • Commodities Transaction Tax [Section 36(1)(xvi)]
  • Any Other Expenses not being personal or capital expenditure mentioned under section 30 to 36 of Income Tax Act, incurred wholly and exclusively for business (Section 37(1))
  • Expenditure on Advertisement (Section 37(2B)):

If any expenditure is incurred in respect of advertisement of any political party is not allowed as deduction under income tax. Any other expenses related to advertisement can be claimed as deduction.