Income under the Head PGBP


Income Chargeable under the Head PGBP



Section 28 – Profits and Gains from Business and Profession



Following are the items chargeable under the head PGBP:-



S.No
Income under the head PGBP
1
Income from Business/Profession /Vocation

2
Compensation received in relation to
Ø  Termination/Modification of Managing Agent's Agreement -Managing  Indian Company
Ø  Termination/Modification of Managing Agent's Agreement -Managing  and other company in India
Ø  Termination/Modification of a person's agency agreement(Contract) -Managing  business of other person
Ø  Vesting of management of property or business with Govt/Govt Corporation
3
Income from specific services
Performed by trade or professional association for its members
4
Export Incentives
Ø  Import License - Profit on sale of Import License
Ø  Cash Assistance against Exports - Under any Govt Scheme
Ø  Customs/Excise Duty Drawback
Ø  Profit on Transfer of Duty Entitlement Pass Book (DEPB) Scheme
Ø  Profit on Transfer of Duty Free Replenishment Certificate (DFRC)
5
Benefit/Perquisite
Arising from Business or Exercise of Profession (Cash/Kind both taxable)
6
Sum receivable by Partner of a Firm
Interest, Salary, Remuneration, Commission, Bonus by whatever name called.
Consider 40(b) - Adjust the payments with amounts disallowed
7
Keyman Insurance Policy
Any sum received under KIP, including bonus
8
35AD Capital Asset
Any sum received on demolish, destroy, discard, transfer of such asset
9
Non-competency agreement
Ø  For not carrying out any Business or profession
Ø  For not sharing any Know-how, patents, copyright, trade mark, license, franchise, Business or commercial right
Exception :- Following receipts are not taxable under PGBP
Ø  Sum received on account of transfer of Right to Manufacture/Produce/Process an article or to Carry on Business or profession
Ø  b. Sum received as compensation from Multilateral fund of the Montreal Protocol on substances that deplete Ozone layer under UN Environment Program in accordance with GOI




Example of Income computation of Partner

Explanation 2 : Speculative Business shall be treated distinct and separate

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