Taxation of income from business and profession is a crucial aspect of financial planning for self-employed individuals, freelancers, and professionals. As we step into April 2025, it’s essential to stay updated with the latest tax rules to ensure compliance and optimize tax savings.

1. What Constitutes Business & Professional Income?

Income from business and profession includes earnings from:

• Trade, commerce, or manufacturing activities
• Freelancing, consulting, or professional services (e.g., doctors, lawyers, CA, architects)
• Commission-based work (e.g., agents, brokers)
• Income from partnerships or sole proprietorships

2. Key Tax Rules for FY 2024-25 (AY 2025-26)

A. Presumptive Taxation Scheme (Section 44AD & 44ADA)

• For Businesses (Section 44AD): Small businesses with turnover ≤ ₹3 crore (₹2 crore for FY 2023-24) can declare profits at 8% (6% for digital transactions).
• For Professionals (Section 44ADA): Eligible professionals (lawyers, doctors, consultants, etc.) with receipts ≤ ₹75 lakh can declare profits at 50%.

B. Deductions & Expenses Allowed

• Business Expenses: Rent, salaries, office maintenance, travel, and advertising costs are deductible.
• Depreciation: Claimable on assets like machinery, computers, and vehicles.
• Interest on Business Loans: Deductible if used for business purposes.
• Home Office Deduction: If working from home, a portion of rent, electricity, and internet bills can be claimed.

C. Advance Tax & TDS Compliance

• Advance Tax: Applicable if tax liability exceeds ₹10,000 in a financial year. Instalments are due on 15th June, September, December, and March.
• TDS on Professional Fees (Section 194J): Clients deduct 10% TDS on professional payments exceeding ₹30,000 (₹50,000 for doctors).

D. GST Compliance (If Applicable)

• Businesses with turnover exceeding ₹40 lakh (₹20 lakh for services) must register under GST.
• Professionals providing interstate services must register regardless of turnover.

3. Penalties for Non-Compliance

• Late filing of ITR: Up to ₹10,000
• Non-payment of advance tax: Interest under Section 234B & 234C
• Concealment of income: 50% to 200% penalty on tax evaded

4. Tax-Saving Tips for Professionals & Business Owners

• Opt for Presumptive Taxation if eligible to reduce compliance burden.
• Maintain Proper Books of Accounts to claim legitimate deductions.
• Invest in Tax-Saving Instruments (Section 80C, 80D, etc.) to reduce taxable income.
• Use Digital Payments to avail lower presumptive taxation rates.

Conclusion

     Staying updated with tax rules helps in minimizing liabilities and avoiding penalties. For FY 2024-25, ensure timely advance tax payments, maintain proper records, and leverage deductions to optimize your tax outgo.