Sources of Income
- Employment
- Business / Trade / Profession
- Investment Income (rental, interest, dividends, etc.)
- Other sources as defined under the Act
Business / Investment Income – Deductible Expenses
- Capital expenses with benefit beyond 12 months are disallowed.
- Interest expense for production of income or acquiring income-producing assets is allowed.
- Cost of sales allowed; closing stock valued at lower of cost or market.
- Repairs/improvements on depreciable assets allowed (Buildings 5%, Others 20%).
- Research & Development and approved agricultural startup expenses deductible.
- Capital Allowances under 2nd or 4th Schedule (Building 5%, Intangibles 5%, Others 20%).
- Business or investment losses can be carried forward up to 6 years (except exempt business).
Qualifying Payments & Reliefs
- Donations by individuals: up to lesser of ⅓ TI, ¼ AI or Rs. 75,000.
- Donations by entities: up to lesser of ⅕ TI, ⅙ AI or Rs. 500,000.
- Eligible beneficiaries: Government, local authorities, approved funds/charities/universities.
- 25% relief on rental income for individuals.
- Personal relief – up to Rs. 1.8 million for residents (with conditions).
Exemptions & Special Cases (2025 Update)
- Interest from foreign-currency accounts, certain Govt loans under conditions.
- Dividend & gains on realization of certain non-resident company shares (with conditions).
- Certain sectors exemptions ended (e.g., agro-farming pre-processing, IT exports, foreign-remittances) — check effective dates.
- Non-resident income from lab/testing services and approved religious institution grants may remain exempt under conditions.