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Business Tax
Updated: 15th August 2026•Income-tax Act, 2025 (TY 2026-27)

Profits & Gains of Business or Profession (PGBP): Allowable Deductions

व्यवसाय आय एवं कटौती नियम (PGBP)

Comprehensive guide to computing taxable business income under Section 28 to 44DB: allowable revenue expenses u/s 37, statutory depreciation rates u/s 32, and Section 40A cash transaction limits.

Written by: Author Profile
Direct Tax & CA Review Panel

Chartered Accountancy Review Panel • Senior Direct Tax Review Desk

Reviewed & Fact-Checked by: Technical Review Panel
Tax Law & Dispute Review Desk

Tax Litigation & Legal Review Panel • Tax Appeal & Procedure Review Desk

Published: 1st April 2026•Last Updated: 15th August 2026•Last Reviewed: 15th August 2026

Key Statutory Highlights (FY 2026-27 (AY 2027-28))

Section 37 general deduction allows all expenses incurred wholly and exclusively for business purposes.
Section 32 allows block depreciation on computers (40%), plant & machinery (15%), and buildings (10%).
Section 40A(3) disallows any business payment exceeding ₹10,000 made in cash per person per day.
Section 43B(h) mandates timely payment to MSMEs within 15/45 days to claim expense deduction in the same financial year.

Who is Eligible & When Does it Apply?

Applicability #1

All commercial entities, traders, and service providers maintaining regular books of accounts.

Step-by-Step Procedure & Compliance Roadmap

1

Prepare Net Profit per Profit & Loss A/c

Start with net profit before tax as per audited financial statements.

2

Add Back Inadmissible Expenses

Add back personal expenses, excessive cash payments u/s 40A(3), and penalties.

3

Deduct Allowable Tax Depreciation

Replace accounting depreciation with statutory income tax depreciation.

Mandatory Documents Checklist

Trial balance, Balance Sheet, P&L Statement, Invoices, Bank statements

Common Mistakes & Compliance Risks to Avoid

•Violating Section 43B(h) MSME payment timelines.
•Claiming personal motor car fuel or travel expenses.

Frequently Asked Questions

What is Section 43B(h) for MSME payments?

Section 43B(h) states that payments to registered Micro and Small enterprises must be made within 15 days (or 45 days if agreed in writing), otherwise the expense cannot be deducted in that FY until paid.

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🛡️ Educational Disclaimer: FinSetu India is an independent educational guidance and calculation platform. Content is published for general citizen awareness based on applicable laws as of FY 2026-27 (AY 2027-28). We do not provide personalized legal/tax advice or file returns directly. Verify current applicable rules on official portals or consult a qualified Chartered Accountant / Tax Lawyer.