SECTION 28 PROFITS AND GAINS OF BUSINESS OR PROFESSION
Updated: Oct 13
Income falling under the category of "Profits and Gains of Business or Profession" shall be subject to income tax on the following amounts :
01. The earnings from any company or profession that the assessee conducted at any point in the prior year.
02. Any remuneration or other payments due to or received by,
Anyone, regardless of title, managing all or nearly all of an Indian company's affairs at the time of his departure from management or the alteration of the terms and conditions governing such management;
Any individual, regardless of title, managing all or nearly all of any other company's activities in India at or in connection with the termination of his office or the alteration of the terms and conditions pertaining thereto;
Anyone, regardless of name, who holds an agency in India for all or a portion of the activities about another person's business at the time of the agency's termination or when the terms and circumstances governing it are modified;
Any person, for or in connection with the management of any property or business being vested in the Government, or any company owned or controlled by the Government, under any law currently in effect;
Any individual, regardless of their name, who is present at or involved in the termination or modification of the terms and circumstances of any contract about his business.
03. A trade, professional, or comparable association's income from certain services rendered to its members;
Earnings from the sale of a licence made under the Imports and Exports (Control) Act, 1947 (18 of 1947), which was issued under the Imports (Control) Order, 1955;
Any form of cash aid (by whatever name it may go by) received or due by anyone about exports under a Government of India programme;
Under the Customs and Central Excise Duties Drawback Rules, 1971, any duty of customs or excise repaid or repayable as a drawback to any individual against exports;
Any gain from the sale of the Duty Entitlement Pass Book Scheme, which is the Duty Remission Scheme implemented by the export and import policy set forth and announced by section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);
Any profit from the sale of the Duty-Free Replenishment Certificate, which is part of the Duty Remission Scheme established and announced by section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), which establishes export and import policies.
04. The worth of any advantage or prerequisite resulting from business or the practice of a profession, whether or not it is convertible into money.
05. Any interest owed to or received by a partner of a firm from that firm, as well as any salary, bonus, commission, or other forms of payment, regardless of its name:
The income under this clause shall be adjusted to the extent of the amount not so allowed to be deducted if any interest, salary, bonus, commission, or remuneration, by whatever name called, or any portion thereof, has not been allowed to be deducted under clause (b) of section 40;
5 (a) any amount earned or owed under a contract, whether in cash or kind
Refraining from engaging in any activity associated with a company or profession; or
Refraining from disclosing any know-how, patents, copyrights, trade names, licences, franchises, or other commercial rights of a similar type, as well as other knowledge or techniques that would be used in the production of goods, their processing, or the supply of services.
To the extent that sub-clause (a) does not apply to—
Any amount received or owed, in cash or kind, in connection with the transfer of the right to create, produce, or process any good or service, or the right to practise any trade or profession, which is subject to taxation under the heading "Capital Gains";
Any money that was compensated through the UN Environment Program's multilateral fund for the Montreal Protocol on Substances that Deplete the Ozone Layer by the conditions of the agreement made with the Government of India.
Explanation. About this clause,
Any agreement, understanding, or coordinated action is referred to as an "agreement,"
Whether an agreement, understanding, or action is formal or in writing depends on (A); or
Whether or whether such agreement, understanding, or action is intended to be upheld through legal action;
"Service" refers to any offered-to-users service, including those in the fields of accounting, banking, communication, conveying news or information, advertising, entertainment, amusement, education, financing, insurance, chit funds, real estate, construction, transport, storage, processing, supply of electrical or other energy, boarding and lodging.
06. Any payment made under a Keyman insurance policy, including any bonus payments made under the policy.
Explanation: "Keyman insurance policy" has the meaning ascribed to it in clause (10D) of section 10 for this clause.
The fair market value of inventory as of the day it is treated as, or converted into, a capital asset, as determined by the authorised method.
07. any amount paid or owed, whether in cash or kind, for any capital asset (other than land, goodwill, or financial instruments) that is destroyed, disposed of, transferred, or demolished, if the entire cost of such an item has been deducted under section 35AD.
Explanation 1. [Omitted with effect from 1-4-1989 by the Direct Tax Laws (Amendment) Act, 1987.]
Explanation 2. The business (hence referred to as "the speculation business") shall be distinct and separate where speculative transactions conducted by an assessee are of a character to constitute a business.