Typically, any expense you incur towards generating or operating your business is deductible against your gross taxable income.
- Telephone bills and internet bills
- Rent for office space
- Work-related meal expenses and travel expenses
- Advertising, promotional and printing expenses
- Depreciation on assets such as laptops or computers. See Income Tax Department’s depreciation rates.
- Income tax return filing fees paid to private platforms like CAXPERT
- Travelling expenses for professional work
- Conveyance expenses
- However, as per section 43B of the Income Tax Act, certain expenses even though rightly incurred towards business may only be allowed if the actual payment has been made.
- Taxes, duties, GST payable will not be allowed as deductible expense unless the cash outflow has actually occurred.
- Employer contribution towards Employee benefits – if not paid out, cannot be treated as a deductible expense for the financial year.
- Bonus and commission payable to employees.
- Interest payable but not paid on any loan, advance or borrowing.
- Payment to Railways which is still payable.
- Leave Encashment expenses payable.
- Therefore, while your books of accounts will consider the above to be a legitimate expense, the Income Tax Act disallows deducting these from your gross taxable income.