Manner of computing profits and gains of business or profession.

27(1)

The income referred to in section 26 shall be computed as per the provisions of sections 28 to 60, except section 58.

Explanation

Section Summary:

Section 27(1) of the new income tax law in India outlines the method for calculating profits and gains from business or profession. It specifies that the income from business or profession, as referred to in Section 26, must be computed in accordance with the provisions of Sections 28 to 60, excluding Section 58. This section essentially provides the framework for determining taxable income from business or professional activities.

Practical Implications:

• Taxpayers and Businesses: Taxpayers engaged in business or profession must ensure that their income is computed in line with Sections 28 to 60, excluding Section 58. This affects how deductions, allowances, and other adjustments are applied to arrive at taxable income.
• Compliance Processes: The exclusion of Section 58 means that certain disallowances or deductions under that section will not impact the calculation of business or professional income under this provision.

Critical Concepts:

• Sections 28 to 60: These sections cover various aspects of income computation, including allowable deductions, disallowances, and specific provisions for different types of income.
• Section 58: Special provision for computing profits and gains of business profession on presumptive basis in case of certain residents.

This section ensures clarity and consistency in how business and professional income is calculated, while excluding certain disallowances that might otherwise complicate the process.