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Income Tax Act 2025 · Profits and gains of business or profession

Business & Profession Income under the Income-tax Act, 2025

How business and professional income is taxed — net profit, allowable and disallowed expenses, depreciation, and presumptive taxation for small businesses and professionals.

Profits from any business or profession you run are taxed under Chapter IV-D (sections 26 to 66) of the Income-tax Act, 2025. You are broadly taxed on your net profit — revenue minus the expenses the Act allows (rent, salaries, depreciation, interest and more) — with some expenses specifically disallowed. Small businesses and professionals can often opt for presumptive taxation to avoid detailed books.

  • Section 26 — what income is charged under this head.
  • Section 27 — profit is computed under sections 28 to 60.
  • Section 28 onward — the deductions allowed (rent, rates, repairs, insurance, depreciation, etc.).

Sections in this topic

§13
Section 13 of the Income-tax Act, 2025 — Heads of Income (Business & Profession Focus)
Heads of income
§26
Section 26 of the Income-tax Act, 2025 — Profits and Gains of Business or Profession (The Charging Section)
The charging section for business/professional income — profits of any business or profession plus connected receipts.
§27
Section 27 of the Income-tax Act, 2025 — How Business Profits Are Computed
Business income is computed under sections 28-60 — allowable deductions and disallowances applied to your profit.
§28
Section 28 of the Income-tax Act, 2025 — Rent, Rates, Taxes, Repairs and Insurance for Business Premises, Plant, Machinery and Furniture
Rent, rates, taxes, repairs and insurance
§29
Section 29 of the Income-tax Act, 2025 — Deductions Related to Employee Welfare (PF, Superannuation, Gratuity, Pension)
Deductions related to employee welfare
§30
Section 30 of the Income-tax Act, 2025 — Deduction on Certain Premium (Insurance for Stocks, Cattle & Employee Health)
Deduction on certain premium
§31
Section 31 of the Income-tax Act, 2025 — Deduction for Bad Debts and Provision for Bad and Doubtful Debts
Deduction for bad debt and provision for bad and doubtful debt
§32
Section 32 of the Income-tax Act, 2025 — Other Deductions for Business and Profession
Other deductions
§33
Section 33 of the Income-tax Act, 2025 — Deduction for Depreciation on Business Assets
Deduction for depreciation
§34
Section 34 of the Income-tax Act, 2025 — General Conditions for Allowable Business & Profession Deductions
General conditions for allowable deductions
§35
Section 35 of the Income-tax Act, 2025 — Amounts Not Deductible (TDS Default, Taxes & Partner Remuneration Limits)
Section 35
§36
Section 36 of the Income-tax Act, 2025 — Expenses or Payments Not Deductible in Certain Circumstances (Related-Party & Cash Disallowance)
Expenses or payments not deductible in certain circumstances
§37
Section 37 of the Income-tax Act, 2025 — Certain Deductions Allowed Only on Actual Payment Basis (Old Section 43B)
Certain deductions allowed on actual payment basis only
§38
Section 38 of the Income-tax Act, 2025 — Certain Sums Deemed as Profits and Gains of Business or Profession
Certain sums deemed as profits and gains of business or profession
§39
Section 39 of the Income-tax Act, 2025 — Computation of Actual Cost for Depreciation
Computation of actual cost
§40
Section 40 of the Income-tax Act, 2025 — Cost of Acquisition of Certain Assets (Amalgamation, Gift, Will, HUF Partition) Sold as Stock-in-Trade
Special provision for computation of cost of acquisition of certain assets
§41
Section 41 of the Income-tax Act, 2025 — Written Down Value (WDV) of Depreciable Asset
Written down value of depreciable asset
§42
Section 42 of the Income-tax Act, 2025 — Capitalising the Impact of Foreign Exchange Fluctuation on Business Assets
Section 42
§43
Section 43 of the Income-tax Act, 2025 — Taxation of Foreign Exchange Fluctuation (Forex Gain/Loss)
Section 43
§44
Section 44 of the Income-tax Act, 2025 — Amortisation of Certain Preliminary Expenses (Successor to Section 35D)
Amortisation of certain preliminary expenses
§45
Section 45 of the Income-tax Act, 2025 — Deduction for Expenditure on Scientific Research
Expenditure on scientific research
§46
Section 46 of the Income-tax Act, 2025 — Capital Expenditure of Specified Business (100% Deduction, Successor to Section 35AD)
Capital expenditure of specified business
§47
Section 47 of the Income-tax Act, 2025 — Deduction for Expenditure on Agricultural Extension and Skill Development Projects
Expenditure on agricultural extension project and skill development project
§48
Section 48 of the Income-tax Act, 2025 — Tea, Coffee and Rubber Development Account Deduction
Development account
§49
Section 49 of the Income-tax Act, 2025 — Site Restoration Fund Deduction for Petroleum & Natural Gas Business
Site Restoration Fund
§50
Section 50 of the Income-tax Act, 2025 — Special Provision for Trade, Profession or Similar Associations (Deduction of Members' Deficiency)
Special provision in case of trade, profession or similar association
§51
Section 51 of the Income-tax Act, 2025 — Amortisation of Expenditure for Prospecting Certain Minerals
Amortisation of expenditure for prospecting certain minerals
§52
Section 52 of the Income-tax Act, 2025 — Amortisation of Telecom, Amalgamation, Demerger & Voluntary Retirement (VRS) Expenditure
Demerger, scheme of voluntary retirement, etc
§53
Section 53 of the Income-tax Act, 2025 — Stamp Duty Value on Sale of Land or Building Held as Stock-in-Trade
Certain cases
§54
Section 54 of the Income-tax Act, 2025 — Business of Prospecting for Mineral Oils (Special Deductions)
Business of prospecting for mineral oils
§55
Section 55 of the Income-tax Act, 2025 — Taxation of Insurance Business (Life & General)
Insurance business
§56
Section 56 of the Income-tax Act, 2025 — Special Provision for Interest Income of Specified Financial Institutions (NPA Interest)
Special provision in case of interest income of specified financial institutions
§57
Section 57 of the Income-tax Act, 2025 — Revenue Recognition for Construction and Service Contracts (Percentage of Completion Method)
Revenue recognition for construction and service contracts
§58
Section 58 of the Income-tax Act, 2025 — Presumptive Taxation for Business, Profession & Goods Carriage (44AD/44ADA/44AE Successor)
On presumptive basis in case of certain residents
§59
Section 59 of the Income-tax Act, 2025 — Royalty and Fees for Technical Services of Non-Residents with a PE in India
Residents
§60
Section 60 of the Income-tax Act, 2025 — Deduction of Head Office Expenditure for Non-Residents
Deduction of head office expenditure in case of non-residents
§61
Section 61 of the Income-tax Act, 2025 — Presumptive Taxation of Certain Business Activities of Non-Residents
Of certain business activities of certain non-residents
§62
Section 62 of the Income-tax Act, 2025 — Maintenance of Books of Account for Business and Profession
Maintenance of books of account
§63
Section 63 of the Income-tax Act, 2025 — Tax Audit (Limits, Form No. 26 & Due Dates)
Tax audit
§64
Section 64 of the Income-tax Act, 2025 — Special Provision for Computing Deductions on Business Reorganisation of Co-operative Banks
Of co-operative banks
§65
Section 65 of the Income-tax Act, 2025 — Interpretation for Section 64 (Business Reorganisation of Co-operative Banks)
Interpretation for purposes of section 64
§66
Section 66 of the Income-tax Act, 2025 — Interpretation (Definitions for Business & Profession Income)
Interpretation

Frequently asked questions

How is business income taxed under the Income-tax Act 2025?
On net profit — revenue minus allowable expenses (sections 28-60) — under the head "Profits and gains of business or profession" (sections 26-66).
Disclaimer: Educational overview of the Income-tax Act, 2025 (effective 1 April 2026), not professional advice. Confirm your position with our team before acting.

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