Typically, any expense you incur towards generating or operating your business is deductible against your gross taxable income.

These are:-

  • 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.