PGBP Additions and Deductions

Profits and Gains of Business or Profession (PGBP) Additions and Deductions

Following things should be added to ‘Net Profit as per books’:

1. Depreciation as per BOOKS

2. Income tax in BOOKS (including duty, cesses, late fee, or any other payments related to income tax liability)

3. 30% sum payable to residents on which TDS is not deducted

4. 100% sum payable to non-residents on which TDS is not deducted

5. Unreasonable or excessive expenditure by way or goods or service or otherwise to related person

6. Expenditure of more than ₹10,000 paid in a single day in cash or any otherwise than A/c Payee Cheque or ECS (electronic clearance system) of banks

7. Personal Expenses if charged to P/L

8. Capital Expenses (including repairs of capital nature) if charged to P/L

9. Amortized preliminary expenditure if amortized in P/L

10. Fine or penalty paid to any legal authority for infringement or contravention of any law charged to P/L

11. Assessee’s contribution to it’s employee’s Pension Scheme in excess to 10% of his salary

12. Bad debts allowed as deduction in Previous financial years now RECOVERED

13. Cessation of a trading Liability

14. Bonus or commission payable to employee

15. Interest on loan taken from PFI (public financial institution) or SFC (state finance corporation) or SIIC (state industrial investment corporation)

16. Interest on loan taken from SB (scheduled bank) CB (co-operative bank) other than agricultural bank or RRBs

17. Any sum payable to Indian Railways charged as expense in P/L

Following things should be deducted from ‘Net Profit as per books’:

1. Depreciation computed as per Income Tax Law (including additional depreciation)

2. Agricultural Income (exempt as per Income Tax Law)

3. Dividend/Interest/Income from Lottery or any income chargeable to any other heads other than PGBP charged to P/L

4. Income tax refund (including it’s interest)

5. Deductions under section 35 (scientific research)

6. Capital expenditure u/s 35AD (specified business)

(lists are inclusive and not exhaustive, there may be more additions or deductions)