Real Estate & Stock Market : The Best millionaire way?

Real Estate and Stock market : The Best traditional millionaire way of the decade.
Both of the sources sounfsgreat right...but there's a catch.When you invest in stocks there is a great probability that they can degrade in case of major financial event in the world.Also for short term trading,95% of the traders lose the money in the stock markets.It is because of the algo trading that the bigger firms and players have deployed.This gives them an upper hand on a trader who trades based on his emotions and discipline.Read more about algo trading here:https://allaboutabsorbing.blogspot.com/2019/03/algorithmic-trading-changing-indias.html?m=1

Real estate is much safer compared to this.It might give around 5 to 10 % lesser returns but it always appreciates.Comparing the population to land ratio in India this can help a lot.

Now let's understand a simple real life example given by my friend Richard:

You can buy a house worth 300k with only 30k to start and have someone else (tenants) paydown the mortgage.

When you buy stocks, you buy 30k Of stocks and hope it goes up over time..and it maybe worth less than 30k.

I invested in stocks since I was 20. I also invested in real estate for the past ten years where I bought one a year…I was also a trader (futures) for a year.

Real estate (traditional buy and hold) is hands down more powerful.

Here is a real life example of the POWER of real estate investing.

1. Positive Cashflow (Rent – Expenses = Cashflow): I purchased a cute war home in 2008, renovated it and rented it out to a young professional couple. The rent coming in paid for all of the expenses, including property taxes, mortgage, insurance, maintenance and still made $100+ of positive cash per month. After seven years of holding it, I netted over $11,000 in cash flow, even with three months of vacancy and maintenance expenses.

2. Appreciation (Increase to property values): The cute war home increased in property value over time, averaging 5% annually! I forced appreciation by “blinging” it up, i.e. renovations and landscaping. The house was also located in a nice area adjacent to a very desirable high-end neighbourhood. I bought the house originally for $226K and it was appraised at $345K in 2015. It’s now worth 400k in 2018.

3. Mortgage Loan Pay down: After seven years of holding this property with tenants primarily paying down the mortgage, I’ve locked in $50,000 dollars in forced savings. Now, I am holding this house for my kids. I plan to keep this property for a long time to pay for my kids education; however, if I sold it now, I would have an easy extra $60,000 dollars in my pocket that was mostly paid down by my tenants. I initially invested $43k, which has already doubled over the 8 year period. By the end of 22 years, due to mortgage paydown, I will own the property outright, increasing my equity from $43k to full $226,000 (assuming no price appreciation).. Or potentially 600k plus plus in 2040 assuming only 2% inflation growth.

5. Tax Write-Offs: There are loads of tax advantages to having rental income. Expenses like mortgage interest and maintenance costs are tax deductible. So, in a way, you can think of the savings in taxes as if your expenses were paid partially by the government. This reduces taxes that you would have paid annually to the government, which means more money in your pocket.

Expenses like mortgage interest, insurance, maintenance expenses and depreciation of the property reduces the taxes you pay annually to the government. Although I gained $17k in gross rent, I also had $10k dollars in expenses that are write offs. From the remaining income I can deduct capital depreciation to write off all of my rental income on this property and save myself paying taxes

5. Power of Leverage: I bought this cute home with a down payment that was leveraged by borrowed money from the bank, i.e. a mortgage. While the tenants paid for my mortgage, I benefited from the growth of both my down payment AND the borrowed money from the bank. After eight years of holding it, I’ve made over 320% return on my capital investment, including the benefits of positive cashflow, equity growth and appreciation.

This is why real estate investing makes you wealthy.

Adding up all these factors, at the time this article was written, this property had grown to a $153K return, and continues to grow.

What’s even more amazing is that this is not an extraordinary property.

In fact, it’s less than ideal property because it only has two bedrooms and one bathroom. Despite its flaws, the house is still making money and matures with time.

With investing in stocks- there is only one way to make money, hoping that the company continues to generate more revenue and beats quarterly estimates. Some stocks pay a part of their profits through a dividend back to you. But if the stock goes up, the only way you can access the money is selling the stock.

With real estate, if it does well, you can access the gains (equity) without selling and invest even more.

But if your objective is to get used to investing, start with stocks, get a taste for investing. Stocks are worthwhile as a form of investment, easy to buy and little to no work ongoing work required. The downside, though, is that you can only own what you can immediately buy. But you can start with a lot less money and then grow your knowledge for investing..(calculated risk taking) eventually scale into real estate investing because it takes more money to invest.

Eyes wide open- Here is a typical example of stock behaviour when investing in stocks:

In 2007, I bought Lululemon at initial public offering and I sold it six months later at a nice profit. Out of curiosity, I’ve been following the stock ever since. Many years ago, Chip Wilson, the founder, added a lot of drama and controversy to lululemon, his insensitive remarks is every shareholder’s worst nightmare. For example:

‘ Chip Wilson, said the company’s infamously sheer yoga pants fell apart because some women’s thighs were too large.’

Wow. Following this remark, the stock plummeted from $50 dollars to $32 dollars!

What’s my perspective on mitigating the above risk? Warren Buffet summarizes it well:

‘Try to buy stocks in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.’

In a nutshell: there are multiple ways to make money in buy and hold real estate and scale without having to sell real estate. As for stocks, you are limited to the growth of the stock and can only access the money when you sell or limited to the cash stored in dividends if you hold the stock.

Warning: for the purposes of this article: I did not go into options, trading stocks, etc as this article was focused on investing.

Investing before Elections: A Smart play?

Investing before Elections: A Smart play?

The markets this year have been missing a major investment part as the investors are biased over whether to maintain current positions or to disinvest since the Elections are just 2 months away from the date.Chances of Government change rised after the Mahagathbandhan and Congress winning elections in over 4 states earlier this year.

Irrespective of all the political situation,there is one conclusion I witnessed from the previous data.Every time after the Elections the bulls have witnessed a major rally of around 10% CAGR 

Another interesting fact reveals that during the first two and half years post elections, the equity market remains extra bullish (except in 1999 when there was minority government). After every election, the markets have only created wealth for the investors.

                       

Thus in our opinion, elections offer an opportunity for investors, rather than a threat. Now let’s understand the present macro status of India.

The earnings growth estimate for FY 2019-20 remains positively driven by recovery in corporate banks’ profitability and revival in the investment cycle. The current NBFC liquidity crunch should boost corporate bank growth and profitability in the near term.

We also feel that the GDP growth rate of 7.3 - 7.5 percent may sustain, as benefits of GST, higher MSP, NPA Resolution and capex in transportation sector begin to kick in.

Inflation is also under control and CPI will average at around 4 percent, with some seasonal spikes. Core inflation will rise moderately as the output gap fills and wages begin to rise.

We also expect benchmark yields to average above 7.25 percent. The next move of MPC may be a cut in the second half of 2019. We expect the current account deficit to average around 2.5 percent of GDP in 2019. We also visualize public investment to slow as private capex picks up.

Why equity markets should perform: If we observe, the last decade (2008–2018) can be termed as a loss decade as the Sensex has generated CAGR growth of only 6 percent. This reveals that the capacity utilisation was not optimum (less than 70 percent) despite companies increased their capacity expansion during the first half of the decade by way of capex.

We strongly feel that in the next few quarters, as the demand increases, the present capacity will take care of extra production leading to more earnings of the corporate profits.

Recommendation

Every new government have to focus on few key sectors of the Indian economy to grow like infrastructure, cement, automobile, capital goods, FMCG and other various sectors will remain the key focus of any government to drive the Indian GDP growth.

The upcoming general election in 2019 is an opportunity to invest for the long term. There will be significant volatility but the major advantage of this volatility is to invest. Investing at lower levels and taking a long-term perspective for creating wealth. The pre-election phase has given an opportunity to create wealth.

Top Side Hustles to earn an additional Income 2019

Start something young and start your own income.

Top Side Hustles of 2019

Become an “Influencer”Median weekly income: $2,800

How to get started:

• All you need is a high quality camera (either an iPhone or Mirrorless Camera. Forget the SLR for now).
• Post your content on a platform like Instagram, Youtube and Facebook consistently for 200 days.
• Focus on creating content that can go “viral” and attract the attention of potential subscribers, followers and content sharers by building a genuine audience.
• Cash in on that audience!

Average startup cost: $ 450+ for a mirrorless camera (content is up to you)

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Become an online Guru and sell a courseMedian weekly income: $3,000+ depending on niche

How to get started:

• Think about the product/problem that you want to sell/solve. Most people will buy something that helps them make more money, look attractive, lose weight. That’s it!
• Develop a programme, with modules based on step-by-step solutions for this problem.
  If you have no idea how to create a course;
• Hire a freelancer on a platform like Upwork,to create the entire course for you.

Average startup cost: $39.00 to $299.00 depending on the host platform

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Start a drop-shipping businessMedian weekly income: $2,000+ depending on niche

How to get started:

• Research the best-selling niches using a program called “WatchCount” which will actually show you the most popular products on a site like eBay
• Create a Shopify account and set up your online store (Shopify has plugins to help you get started, specifically with a drop shipping business). You do not need to purchase inventory/stock.
• Create a Facebook fan page for your site
• Export your Facebook Pixel to your Shopify
• Target your audience, and start your ad campaigns
• Re-target and duplicate the audience that buys your products

Average startup cost: $200.00 incl. Facebook ads budget

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Become a self-published authorMedian weekly income: $1,200+

How to get started:

• Write 1000 small books about different topics and publish them on Amazon.
• The great thing about Amazon, as a platform, is that it gives you information about what sells and what doesn’t. Go and look at the best-seller list, right now. Now, go and write something better than that!
  If you don’t know what to write or how to start;
• Hire a ghostwriter from a platform like Upwork.com

Average startup cost: $5 /hr for the freelancer on Upwork. Total spend: $500.00

Bitcoin and Indian Economy = Smoking besides Gasoline Barrels

Bitcoins in India: probably not a great idea.

If you are someone who is diligently following global economy & trending topics, then it's certain that you must have heard of one word “Bitcoin”. Starting from financial agencies, governments, regulating authorities, e-media & other experts, are frequently discussing about this term. What is this Because Bitcoin all about & how to own it?

The concept of Bitcoin came into the picture based upon 2008 white paper which was then released by Satoshi Nakamoto. He is named as the father of Bitcoin. It is said that in India there are close to fifty lakhs of peoples trading in Bitcoins & other virtual currencies. As per the recent developments, transaction's in Bitcoin is banned by three major topmost agencies of our country.

Finance Ministry- Finance Minister in his 2018 budget speech made it clear that any cryptocurrency is not a legal tender in India. However, acknowledged the power of Blockchain & Distributes Ledger Technology (DLT).

RBI - Prohibits on dealing with virtual currencies like Bitcoin. -  Circular RBI/2017-18/154, effective from 05 April 2018 & issued 3 months of buffer period directing entities to end their transactions in Bitcoin.

Supreme Court - The Supreme Court of India refused to give grant a temporary stay on the RBI's prohibition on virtual currencies, filed by IAMAI i.e. Internet and Mobile Association of India through a writ petition.

Although citizens want to accept the emerging digital economy, but the government is not giving them a scope considering its decentralized feature & other associated risk factors.

How Bitcoins are generated-

In case of paper money governments of India printed currency until the RBI was established in 1935, which then took over the responsibility. But the process of getting Bitcoin is altogether different, as it does not have any physical existence.

The Bitcoins are generated through the process called Mining & is operated through peer to peer network. It is entirely executed digitally with the help of internet & suitable hardware's (i.e. Application Specific Integrated Circuit - ASIC), which does not require the traditional process of mining operation like through blasting, drilling & excavation etc. There are two ways of Mining in the Bitcoin process. One is Solo Mining & other is Pool Mining.

Solo Mining- As the name suggests this process is done by a solo/individual miner without any others help.

Pool Mining- Miners connect with other Bitcoin miners. More miner's means more secure network, as it requires validation by other miners as well. (Refer below) Pool miners find quick solution as compared to the individual miners.

Miners need to create a virtual ID & a Wallet for Mining. It involves compiling recent transactions into blocks & turning them into a mathematical equation/puzzle. It uses high computing power to solve a complex mathematical equation/puzzle. In this process first miner announces the solution with the others in the network. The other miners check whether the solutions to the puzzle are correct or not. If more people approves the correctness then the block is cryptographically added to the ledger. As a reward miners gets incentives in the form of Bitcoin. On the other hand if the cost to create the Bitcoin exceeds the reward, miners lose the incentive.

Block chain has no Apex regulating agency, like RBI who regulates the entire monetary policy in India. The major issues transacting in Bitcoin are like it is not backed by any assets & its price are highly volatile in nature as a result of speculation. The prices are generally determined by the involvement of a number of peoples in this transaction. If more numbers of users will go for buying, the price of the Bitcoin goes on increasing & vice versa. Although this is only one way of fixing the price, but it is very hard to know the exact mechanism & hence there exists no such transparency in Bitcoin pricing. It may unpredictably increase or decrease over a short span of time, hence it is a very high-risk asset. In many ransomware attack (like WannaCry), Bitcoins were paid by victims to regain the access.

All transactions in the Bitcoin are stored publicly & permanently on the network. Hence all the interrelated parties can see the balance & transactions of any Bitcoin address. But it is very hard to track the user behind such address, which may lead to Tax evasion, lack of consumer protection, Money laundering etc. To ensure proper regulation of Bitcoin transactions, there necessary a robust mechanism, stringent security infrastructures & the accountability, which may eventually foster the Digital India campaign of Government of India.  

Algorithmic Trading changing India's Markets?

Algorithmic Trading has been kept a tightly held secret for too long. The recent situationhas been that everyone does it, yet no one wants to talk about what they are doing.

Outside this secretive world of algorithmic traders, very few noticed the facts mentioned in a 2016 SEBI Discussion Paperon Algorithmic Trading. The regulatory watchdog mentioned that more than 80% orders placed on exchanges are generated by algorithms. The contribution of algorithms in the total numbers of trades was approximately 40%.

The recent results of a survey done by an independent private company, AlgoJi are even more surprising. As per that survey, algorithms contribute approximately 90% of all orders submitted, and 75% of all trades executed on exchanges. The survey details many facts about technology and strategies used by traders.

Saurabh Lohiya, the co-founder of AlgoJi explains these results. “An intraday algo trader sends more orders in a single day, then a passive investor may do in his lifetime. Even though the algo traders may be small in number, they dominate all the trading volumes and price action in markets. Also, even a lot of manual traders use algorithms to generate Buy and Sell signals. Everyone is making use of technological advancements for less dependence on hunches and emotions.”

The secrecy in algorithmic trading is finally sinking away in the limelight of conferences and seminars. Industry bodies such as Commodity Participants Association of India are supporting AlgoJi’s conferences. The next such conference will be organized at Constitution Club of India on 8th December, 2018.CaClubIndia is a media partner in this conference to spread awareness on latest technological advancements in the field of investment management through algorithms.

How to get a trademark? Let's find out.

We live in an era where only physical holdings are not the only assets... trademarks,goodwills,Intellectual Property rights form a major part of assets these days.Let ud learn about one of these today:The Trademark.
What is a Trademark?

Trademark is a visual representation attached to goods for the purpose of indicating their origin and is recognized by law. It includes any word, name, symbol, configuration, device, Shape of goods, packaging, a combination of colors or any combination thereof which one adopts and uses to identify and distinguish his good from others.

Essentials of Trademark:-

• It should be a mark;
• It should be capable of being represented graphically; and
• It should be capable of distinguishing the goods or services of one person from those of others.

Functions of Trademark:-

• It identifies the goods of one trader and distinguishes them from goods sold by others;
• It signifies that all goods bearing a particular trademark come from a single source;
• It signifies that all goods bearing a particular trademark are of an equal level of quality;
• It acts as a prime instrument in advertising and selling the goods

Process:

• Creation
• Screening
• Clearance
• Investigation
• Opinion
• Filing/Registration
• Protection
• Commercial Exploitation

Jointly owned Trademark:

Registration of a single trademark on the name of two proprietors, who would use it independently, is not possible. However, a person other than the registered proprietor of a trademark can be registered as a user of the trademark (certainly with the consent of the proprietor).

International protection of Trademark:-

Trademark is territorial in nature so if a company plans to expand its market abroad it will really become difficult for him to register the trademark abroad this renders the company an exclusive right to commercialize its products in those markets in abroad. It also provides a strong premise not just for stopping counterfeiters but also ensuring that the company enjoys exclusive rights over one of its most valuable business asset. Further, it provides the opportunity of licensing the trademark to others or may be the basis for that company’s franchising or merchandising strategy.

What are the benefits of a Trademark?

Generally, people are under the perception that they can protect their trademark simply by using the mark in commerce. It is right that you are not required to register a trademark to achieve some level of protection and also that one ascertains common law rights simply by using a mark in commerce.

Who should get the trademark register?

• Businessmen: A trademark may be registered for goods or anything which is the subject of trade or manufacture (Safeguarding the product).

• Service Providers: He is the one who provides services of any description which is made available to potential users and include the provision of services in connection with business of any industrial or commercial matter like banking, communication, education, financing, insurance, real estate, entertainment, transport, construction, boarding lodging, advertising etc (Protecting the name and quality of services).

• Well Known Brands: A brand or a mark/ Symbol which become a substantial segment of the public which uses such goods or receives such services that use of such mark/symbol in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods. (Safeguarding the name).

• Domain Name: It’s important to protect the name of your website so that it is not used by anyone else otherwise it can hamper your profits and growth. (Protect the name of your website)
Using trademarks preserves the special work of the Company and helps it having higher demand since anyone else is not authorized to monetize on such property.

How can you improve your supply chain quality?

Supply chain management:-

Your telephone can connect to your ledger, online networking, photograph library, count calories tracker that you killed a year prior, and share data between the majority of those applications. For what reason isn’t your inventory network connected and partaking similarly?

The business has been pestering store network storehouses for over 10 years, yet they’re as yet normal. Most supply chain today still have a few regions that aren’t associated, and the information is walled off, which hurts the capacity of all organizations required to comprehend their activities completely. The advantages of store network permeability are tied in with making the 10,000-foot view information to guarantee your business is running easily, your accomplices are the correct ones, and that you are as gainful as could reasonably be expected.

The initial step isn’t finding the concealed truth that will change your reality; it’s tied in with setting yourself up for that revelation. Connecting frameworks to create store network permeability is the path authority at each level can begin looking into the genuine situation.

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Here are three different things it can achieve for you as well.

Not any more Risky Business

Decrease hazard and allow yourself to develop through brilliant, inventory network knowledge. A touch of comprehension can go far.

What we like most about the first of the advantages of production network permeability is at it can shield you and shield the upper administration from getting on your case, by diminishing the probability that things will turn out badly. One of the least demanding fixes that permeability can help with is recognizing store network territories with a solitary purpose of disappointment — regularly items that have just a single merchant.

Permeability can likewise give you the information to better figure request so you won’t come up short on something in occupied or lean circumstances, see regions where your merchandise might be in danger in travel, and track shipments or exchanges as they travel through each point and friends.

Store network permeability is the establishment that will enable your stockroom chiefs to improve orders in light of stock checks, comprehend the lead time that is required for every item or part, and the last deal estimation of those items after they’ve sat on your rack for a bit.

Run a More Efficient Operation at Every Step

Production network permeability frequently accompanies ongoing information and vigorous dashboard instruments that can make previews of different parts of your business. This information allows you to take a gander at over your business to see where you may keep running into inconvenience, and where you could possibly move a work process to evacuate bottlenecks.

You can utilize business insight to check whether you’re accepting excessively in a short measure of time or if your requests are being surged in light of the fact that nobody checks for extra requests until 4 p.m. It may even show on the off chance that you have one particularly moderate merchant or have shifts that need more individuals to run easily — having the wrong work power can spare you or cost you enormous.

Inventory network permeability enables you to check every one of those hunches and responses you have. You very well might find that your “most exceedingly awful” merchant is performing admirably, however, it’s a stockroom issue causing the issue, or that you best sellers have steady requests that make it simple to design and convey.

Treat Your Customers Better

In articles this way, we frequently get a kick out of the chance to centre around the subject — store network permeability for this situation — like an enchantment wand we can wave to cure all business issues. That’d be extraordinary, however, it isn’t practical. Things are as yet going to turn out badly.

In any case, that is additionally a region where inventory network permeability sparkles. Far-reaching learning about the condition of things doesn’t anticipate issues, however, it serves to feature them rapidly. Observing and alarms that may accompany production network permeability make it substantially less demanding for you to run an activity that can adjust rapidly — this implies coordination is an unquestionable requirement have when you pick your next WMS or another stage.

Considering issues to be they happen enables a business to change. Or on the other hand, in the event that you can’t settle things on the fly, it allows you to quickly refresh clients on a shipment status, item accessibility, review, or whatever else that may happen.

Your clients won’t be as cheerful as they would if nothing had turned out badly, yet they’ll value getting enough notice to change their own plans. You’ll even locate that sharing this track-and-follow information can yield a general positive affair that keeps your clients around longer and expands their lifetime esteem for your business.

You can ace the last mile with quality these advantages of inventory network permeability.

Profits and Gains from Business and Profession

 profits and gains from business and profession, the following types of incomes must be added:

1. Profit and gains from any business or profession carried on by the assessee at any time during the previous year
2. Any compensation or other payment due to or received by any specified person
3. Income derived by a trade, professional or similar association from specific services performed for its members
4. Profit on sale of a license granted under the Imports (Control) Order 1955, made under the Import Export Control Act, 1947
5. Cash assistance (by whatever name called) received or receivable by any person against exports under any scheme of Government of India
6. Any duty of Customs or Excise repaid or repayable as drawback to any person against exports under the Customs and Central Excise Duties Drawback Rules, 1971.
7. Profit on transfer of Duty Entitlement Pass Book Scheme, under Section 5 of Foreign Trade (Development and Regulation) Act, 1992
8. Profit on transfer of Duty Free Replenishment Certificate, under Section 5 of Foreign Trade (Development and Regulation) Act 1992
9. Value of any benefits or perquisites arising from a business or the exercise of a profession.
10. Interest, salary, bonus, commission or remuneration due to or received by a partner from partnership firm
11. Any sum received or receivable for not carrying out any activity in relation to any business or profession; or
12. Any sum received or receivable for not sharing any know-how, patent, copyright, trademark, licence, franchise, or any other business or commercial right or information or technique likely to assist in the manufacture of goods or provision of services.
13. Any sum received under a Key man Insurance policy including the sum of bonus on such policy
14. Any sum received ( or receivable) in cash or in kind, on account of any capital assets (other than land or goodwill or financial instrument) being demolished, destroyed, discarded or transferred, if the whole of the expenditure on such capital assets has been allowed as a deduction under section 35AD
15. Income from speculative transactions. However, it shall be deemed to be distinct and separate from any other business.
16. Remission or cessation of liability in respect of any loss, expenditure or trading liability incurred by the taxpayers
17. Recovery of trading liability by successor which was allowed to the predecessor shall be chargeable to tax in the hands of successor. Succession could be due to amalgamation or demerger or succession of a firm succeeded by another firm or company, etc.
18. Any liability which is unilaterally written off by the taxpayer from the books of accounts shall be deemed as remission or cessation of such liability and shall be chargeable to tax.
19. Depreciable asset in case of power generating units, is sold, discarded, demolished or destroyed, the amount by which sale consideration and/ or insurance compensation together with scrap value exceeds its WDV shall be chargeable to tax.
20. Where any capital asset used in scientific research is sold without having been used for other purposes and the sale proceeds together with the amount of deduction allowed under section 35 exceed the amount of the capital expenditure, such surplus or the amount of deduction allowed, whichever is less, is chargeable to tax as business income in the year in which the sale took place.
21. Where bad debts have been allowed as deduction under Section 36(1)(vii) in earlier years, any recovery of same shall be chargeable to tax.
22. Amount withdrawn from special reserves created and maintained under Section 36(1)(viii) shall be chargeable as income in the previous year in which the amount is withdrawn.
23. Loss of a discontinued business or profession could be adjusted from the deemed business income as referred to in section 41(1), 41(3), (4) or (4A) without any time limit.
24. Where the consideration for transfer of land or building or both as stock-in-trade is less than the stamp duty value, the value so adopted shall be deemed to be the full value of consideration for the purpose of computing income under this head.
25. As per RBI Guidelines, Interest on bad and doubtful debts of Public Financial Institution or Scheduled Bank or [a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank] or State Financial Corporation or State Industrial Investment Corporation, shall be chargeable to tax in the year in which it is credited to Profit and Loss A/c or year in which it is actually received, whichever happens earlier.
26. Similarly, as per NHB Guidelines, Interest on bad and doubtful debts of housing finance company, shall be chargeable to tax, in the year it is credited to P & L A/c or year in which it is actually received by them, whichever is earlier.
27. Assistance in the form of a subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement (by whatever name called) by the Central Govt. or State Govt. or any authority or body or agency to the assessee would be included in definition of income as referred to in Section 2(24). However, in the following cases subsidy or grant shall not be treated as income:
28. The subsidy or grant or reimbursement which is taken into account for determination of the actual cost of the asset in accordance with the provisions of Explanation 10 to clause (1) of Section 43;
29. The subsidy or grant by the Central Government for the purpose of the corpus of a trust or institution established by the Central Government or a State Government, as the case may be.

Once the above items, as applicable are added to the income head, deductions can be claimed

The following items can be deducted from the head profits and gains of business or profession.

Section	Nature of expenditure	Quantum of deduction	Assessee
30	Rent, rates, taxes, repairs (excluding capital expenditure) and insurance for premises	Actual expenditure incurred excluding capital expenditure	All assessee
31	Repairs (excluding capital expenditure) and insurance of machinery, plant and furniture	Actual expenditure incurred excluding capital expenditure	All assessee
32(1)(i)	Depreciation on i) buildings, machinery, plant or furniture, being tangible assets; ii) know-how, patents, copyrights, trademarks, licenses, franchises, or any other business or commercial rights of similar nature, being intangible assets	Allowed at prescribed percentage on Straight Line Method for each asset Provided that where an asset is acquired by the assessee during the previous year and is put to use for a period of less than one hundred and eighty days in that previous year, the deduction in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset.	Assessees engaged in business of generation or generation and distribution of power Note: Taxpayers engaged in the business of generation or generation and distribution of power shall have the option to claim depreciation either on basis of straight line basis method or written down value method on each block of asset.
32(1)(ii)	Depreciation on i) buildings, machinery, plant or furniture, being tangible assets; ii) know-how, patents, copyrights, trademarks, licenses, franchises, or any other business or commercial rights of similar nature, being intangible assets	Allowed at prescribed percentage on WDV method for each block of asset Provided that where an asset is acquired by the assessee during the previous year and is put to use for a period of less than one hundred and eighty days in that previous year, the deduction in respect of such asset shall be restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset.	All assessees
32(1)(iia)	Additional depreciation on new plant and machinery (other than ships, aircraft, office appliances, second hand plant or machinery, etc.). (subject to certain conditions)	Additional depreciation shall be available @20 % of the actual cost of new plant and machinery. Provided that where an asset is acquired by the assessee during the previous year and is put to use for a period of less than one hundred and eighty days in that previous year, then deduction of additional depreciation would be restricted to 50% in the year of acquisition and balance 50% would be allowed in the next year	All assessee engaged in – manufacture or production of any article or thing; or – generation, transmission or distribution of power (if taxpayer is not claiming depreciation on basis of straight line method)
Proviso to Section 32(1)(iia)	Additional depreciation on new plant and machinery (other than ships, aircraft,office appliances, second hand plant or machinery, etc.)) (Subject to certain conditions)	Additional depreciation shall be available @35 % of the actual cost of new plant and machinery. Provided that where an asset is acquired by the assessee during the previous year and is put to use for a period of less than one hundred and eighty days in that previous year, then deduction of additional depreciation would be restricted to 50% of actual cost in the year of acquisition and balance 50% would be allowed in the next year Note: 1. Manufacturing unit should be set-up on or after 1st day of April, 2015. 2. New plant and machinery acquired and installed during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020	All assessees- where an assessee sets up an undertaking or enterprise for production or manufacture of any article or thing in any notified backward area in state of the state of Andhra Pradesh, Bihar, Telangana or West Bengal.
32AC	Deduction under section 32AC is available if actual cost of new plant and machinery acquired and installed by a manufacturing company during the previous year exceeds Rs. 25/100 Crores, as the case may be.(Subject to certain conditions)	15% of actual cost of new asset	Company engaged in business or manufacturing or production of any article or thing
32AD	Investment allowance for investment in new plant and machinery if manufacturing unit is set-up in the notified backward area in the state of Andhra Pradesh, Bihar, Telangana or West Bengal(Subject to certain conditions)	Investment allowance shall be available @15 % of the actual cost of new plant and machinery in the year of installation of new asset. Note:- 1) New asset should be acquired and installed during the period beginning on the 1st day of April, 2015 and ending before the 1st day of April, 2020. 2) Manufacturing unit should be set-up on or after 1st day of April, 2015. 3) Deduction shall be allowed under Section 32AD in addition to deduction available under Section 32AC if assessee fulfils the specified conditions	All assessee who acquired new plant and machinery for the purpose of setting-up manufacturing unit in the notified backward area in the state of Andhra Pradesh, Bihar, Telangana or West Bengal
33AB	Amount deposited in Tea/Coffee/Rubber Development Account by assessee engaged in business of growing and manufacturing tea/Coffee/Rubber in India	Deduction shall be lower of following: a) Amount deposited in account with National Bank for Agricultural and Rural Development (NABARD) or in Deposit Account of Tea Board, Coffee Board or Rubber Board in accordance with approved scheme; or b) 40% of profits from such business before making any deduction under section 33ABand before adjusting any brought forward loss. (Subject to certain conditions)	All assessee engaged in business of growing and manufacturing tea/Coffee/Rubber
33ABA	Amount deposited in Special Account with SBI/Site Restoration Account by assessee carrying on business of prospecting for, or extraction or production of, petroleum or natural gas or both in India	Deduction shall be lower of following: a) Amount deposited in Special Account with SBI/Site Restoration Account; or b) 20% of profits from such business before making any deduction under section 33ABA and before adjusting any brought forward loss. (Subject to certain conditions)	All assessee engaged in business of prospecting for, or extraction or production of, petroleum or natural gas or both in India
35(1)(i)	Revenue expenditure on scientific research pertaining to business of assessee is allowed as deduction (Subject to certain conditions).	Entire amount incurred on scientific research is allowed as deduction. Expenditure on scientific research within 3 years before commencement of business (in the nature of purchase of materials and salary of employees other than perquisite) is allowed as deduction in the year of commencement of business to the extent certified by prescribed authority.	All assessee
35(1)(ii)	Contribution to approved research association, university, college or other institution to be used for scientific research shall be allowed as deduction (Subject to certain conditions)	175% of sum paid to such association, university, college, or other institution is allowed as deduction. 150% of sum paid to such association, university, college or other institution is allowed as deduction (applicable from AY 2018-19) Note:- From the AY beginning on or after the 1st day of April, 2021, the deduction shall be equal to the sum so paid.	All assessee
35(1)(iia)	Contribution to an approved company registered in India to be used for the purpose of scientific research is allowed as deduction (Subject to certain conditions)	125% of  sum paid to the company is allowed as deduction Entire sum paid to the company is allowed as deduction (applicable from AY 2018-19)	All assessee
35(1)(iii)	Contribution to approved research association, university, college or other institution with objects of undertaking statistical research or research in social sciences shall be allowed as deduction (Subject to certain conditions)	125% of sum paid to such association, university, college, or other institution is allowed as deduction Entire sum paid to such association, university, college or other institution is allowed as deduction (applicable from AY 2018-19)	All assessee
35(1)(iv)read with 35(2)	Capital expenditure incurred during the year on scientific research relating to the business carried on by the assessee is allowed as deduction (Subject to certain conditions)	Entire capital expenditure incurred on scientific research is allowed as deduction. Capital expenditure incurred within 3 years before commencement of business is allowed as deduction in the year of commencement of business. Note: i. Capital expenditure excludes land and any interest in land; ii. No depreciation shall be allowed on such assets.	All assessee
35(2AA)	Payment to a National Laboratory or University or an Indian Institute of Technology or a specified person is allowed as deduction. The payment should be made with the specified direction that the sum shall be used in a scientific research undertaken under an approved programme.	200% of payment is allowed as deduction (Subject to certain conditions). 150% of payment is allowed as deduction (applicable from AY 2018-19) Note:- From the A.Y. beginning on or after the 1st day of April, 2021, the deduction shall be equal to the sum so paid.	All assessee
35(2AB)	Any expenditure incurred by a company on scientific research (including capital expenditure other than on land and building) on in-house scientific research and development facilities as approved by the prescribed authorities shall be allowed as deduction (Subject to certain conditions). Expenditure on scientific research in relation to Drug and Pharmaceuticals shall include expenses incurred on clinical trials, obtaining approvals from authorities and for filing an application for patent.	200% of expenditure so incurred shall be allowed as deduction. 150% of expenditure so incurred shall be allowed as deduction (applicable from AY 2018-19) Note: i. Company should enter into an agreement with the prescribed authority for co-operation in such research and development and fulfils conditions with regard to maintenance of accounts and audit thereof and furnishing of reports in such manner as may be prescribed. ii.  From the A.Y. beginning on or after the 1st day of April, 2021, the deduction shall be equal to the expend the so incurred.	Company engaged in business of bio-technology or in any business of manufacturing or production of eligible articles or things
35ABA	Capital expenditure incurred and actually paid for acquiring any right to use spectrum for telecommunication services shall be allowed as deduction over the useful life of the spectrum.	Deduction will be available in equal installments starting from the year in which actual payment is made and ending in the year in which spectrum comes to an end. Note: If spectrum fee is actually paid before the commencement of business, the deduction will be available from the year in which business is commenced.	All Assessee engaged in telecommunication services
35ABB	Capital expenditure incurred for acquiring any license or right to operate telecommunication services shall be allowed as deduction over the term of the license.	Deduction would be allowed in equal installments starting from the year in which such payment has been made and ending in the year in which license comes to an end.	All Assessee engaged in telecommunication services
35AC	Expenditure by way of payment of any sum to a public sector company/local authority/approved association or institution for carrying out any eligible scheme or project (Subject to certain conditions).	Actual payment made to prescribed entities. However, a company can also claim deduction for expenditure incurred by it directly on eligible projects. Note:- No deduction in any A.Y. commencing on or after the 1st day of April, 2018	All assessee. However, deduction for direct expenditure is allowed only to a company
35AD	Deduction in respect of `expenditure on specified businesses, as under: a) Setting up and operating a cold chain facility b) Setting up and operating a warehousing facility for storage of agricultural produce c) Building and operating, anywhere in India, a hospital with at least 100 beds for patients d) Developing and building a housing project under a notified scheme for affordable housing e) Production of fertilizer in India (Subject to certain conditions)	150% of capital expenditure incurred for the purpose of business is allowed as deduction provided the specified business has commenced its operation on or after 01-04-2012. 100% of capital expenditure will be allowed to be deducted from the assessment year 2018-19 onwards Note: If such specified businesses commence operations on or before 31-03-2012 but after prescribed dates, deduction shall be limited to 100% of capital expenditure. Note: No deduction of any capital expenditure above Rs 10,000 shall be allowed if it is incurred in cash.	All assessee
35AD	Deduction in respect of expenditure on specified businesses, as under: a) Laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network; b) Building and operating, anywhere in India, a hotel of two-star or above category; c) Developing and building a housing project under a scheme for slum redevelopment or rehabilitation d) Setting up and operating an inland container depot or a container freight station e) Bee-keeping and production of honey and beeswax f) Setting up and operating a warehousing facility for storage of sugar g) Laying and operating a slurry pipeline for the transportation of iron ore h) Setting up and operating a semi-conductor wafer fabrication manufacturing unit  i)  Developing or maintaining and operating, or developing, maintaining and operating a new infrastructure facility (Subject to certain conditions)	100% of capital expenditure incurred for the purpose of business is allowed as deduction provided specified businesses commence operations on or after the prescribed dates. Note: No deduction of any capital expenditure above Rs 10,000 shall be allowed if it is incurred in cash.	All assessee Note: Such deduction is available to Indian company in case of following business, namely;-  i) Business of laying and operating a cross-country natural gas or crude or petroleum oil pipeline network ii)  Developing or maintaining and operating or developing, maintaining and operating a new infrastructure facility.
35CCA	Payment to following Funds are allowed as deduction: a) National Fund for Rural Development; and b) Notified National Urban Poverty Eradication Fund	Actual payment to specified funds	All assessee
35CCC	Expenditure (not being cost of land/building) incurred on notified agricultural extension project for the purpose of training, educating and guiding the farmers shall be allowed as deduction, provided the expenditure to be incurred is expected to be more than Rs. 25 lakhs (Subject to certain conditions).	150% of the expenditure (Subject to certain conditions) Note:- 100% deduction shall be allowed from the 1st day of April, 2021	All assessee
35CCD	Expenditure incurred by a company (not being expenditure in the nature of cost of any land or building) on any notified skill development project is allowed as deduction (Subject to certain conditions).	150% of the expenditure (Subject to certain conditions) Note:  (i) No deduction shall be allowed to a company engaged in manufacturing alcoholic spirits or tobacco products. (ii) 100% deduction shall be allowed for the AY beginning on or after the 1st day of April, 2021	Company engaged in manufacturing of any article or providing specified services
35D	An Indian company can amortize certain preliminary expenses (up to maximum of 5% of cost of the project or capital employed, whichever is more) (Subject to certain conditions and nature of expenditures)	Qualifying preliminary expenditure is allowable in each of 5 successive years beginning with the previous year in which the extension of undertaking is completed or the new unit commences production or operation.	Indian Company
35DD	Expenditure incurred after 31-3-1999 in respect of amalgamation or demerger can be amortized by an Indian Company	Expenditure is allowed as deduction in five equal installments in 5 previous years starting with the year in which amalgamation or demerger took place.	Indian Company
35DDA	Expenditure incurred under Voluntary Retirement Scheme is allowed as deduction.	Each payment under VRS is allowed as deduction in five equal installments in 5 previous years.	All Assessee
35E	Qualifying expenditure incurred by resident persons on prospecting for the minerals or on the development of mine or other natural deposit of such minerals shall be allowed as deduction (Subject to certain conditions).	Eligible expenditure is allowed as deduction in ten equal installments in 10 previous years.	Resident persons
36(1)(i)	Insurance premium covering risk of damage or destruction of stocks/stores	Actual expenditure incurred	All Assessee
36(1)(ia)	Insurance premium covering life of cattle owned by a member of co-operative society engaged in supplying milk to federal milk co-operative society	Actual expenditure incurred	All Assessee
36(1)(ib)	Medical insurance premium paid by any mode other than cash, to insure employee’s health under (a) scheme framed by GIC of India and approved by Central Government; or (b) scheme framed by any other insurer and approved by IRDA	Actual expenditure incurred	All Assessee
36(1)(ii)	Bonus or commission paid to employees which would not have been payable as profit or dividend if it had not been paid as bonus or commission	Actual expenditure incurred	All Assessee
36(1)(iii)	Interest on borrowed capital (Subject to certain conditions)	Interest paid in respect of capital borrowed for the purposes of the business or profession shall be allowed as deduction. However, if capital is borrowed for acquiring an asset, then interest for any period beginning from the date on which capital was borrowed till the date on which asset was first put to use, shall not be allowed as deduction.	All Assessee
36(1)(iiia)	Discount on Zero Coupon Bonds (Subject to certain conditions)	Pro-rata amount of discount on zero coupon bonds shall be allowed as deduction over the life of such bond	Specified Assessee
36(1)(iv)	Employer’s contributions to recognized provident fund and approved superannuation fund [subject to certain limits and conditions]	Actual expenditure incurred	All Assessee
36(1)(iva)	Any sum paid by assessee-employer by way of contribution towards a pension scheme, as referred to in section 80CCD, on account of an employee.	Actual expenditure not exceeding 10% of the salary* of the employee *Salary = Basic Pay + Dearness Allowance (to the extent it forms part of retirement benefits)+ turnover based commission	All Assessee – Employer
36(1)(v)	Employer’s contribution towards approved gratuity fund created exclusively for the benefit of employees under an irrevocable trust shall be allowed as deduction (Subject to certain conditions).	Actual expenditure not exceeding 8.33% of salary of each employee	All Assessee – Employer
36(1)(va)	Deposit of employee’s contributions in their respective provident fund or superannuation fund or any fund set up under Employees’ State Insurance Act, 1948	Actual amount received if credited to the employee’s account in relevant fund on or before due date specified under relevant Act	All Assessee – Employer
36(1)(vi)	Allowance in respect of animals which have died or become permanently useless (Subject to certain conditions)	Actual cost of acquisition of such animals less realization on sale of carcasses of animals	All Assessee
36(1)(vii)	Bad debts which have been written off as irrecoverable (Subject to certain conditions)	Actual bad debts which have been written off from books of accounts Note:- However, if amount of debt or part thereof has been taken into account in computing the income of assessee on basis of income computation and disclosure standards notified under Section 145(2) without recording the same in accounts then, such debt shall be allowed in the previous year in which such debt or part therof becomes irrecoverable. It shall be deemed that such debt or part thereof has been written off as irrecoverable in the accounts.	All Assessee
36(1)(viia)	Deductions for provision for bad and doubtful debts created by certain banks, financial institutions and non-banking financial company (Subject to certain conditions). Note Deduction in respect of bad debts actually written off under section 36(1)(vii) shall be limited to that amount of bad debts which exceed the provision for bad and doubtful debts created under section 36(1)(viia).	Deductions for provision for bad and doubtful debts shall be limited to following: (a) In case of scheduled and non-scheduled banks: Sum not exceeding aggregate of 8.5% of total income (before any deductions under this provision and Chapter VI-A) and 10% of aggregate average advances made by rural branches of such bank; (b) In case of Financial Institutions: Up to 5% of total income before any deductions under this provision and Chapter VI-A; and (c) In case of foreign banks: Up to 5% of total income before any deductions under this provision and Chapter VI-A (d) In case of non-banking financial company: Up to 5% of total income before any deduction under this provision and chapter VI-A	Banks, Public Financial Institutions, Non-banking financial company, State Financial Corporation, State Industrial Investment Corporations
36(1)(viii)	Deduction under this provisions is allowed to following entities in respect of amount transferred to special reserve account: a) Financial Corporation which is engaged in providing long-term finance for industrial or agricultural development or development of infrastructure facility in India; or b) Public company registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of residential houses in India. [Subject to certain conditions]	Deduction shall be allowed to the extent of lower of following: a) Amounts transferred to special reserve account b) 20% of profits derived from eligible business c) 200% of paid-up capital and general reserve (on last day of previous year) minusbalance in special reserve account (on first day of previous year)	Specified financial corporations or public company
36(1)(ix)	Expenditure incurred by a company on promotion of family planning amongst employees is allowed as deduction	1) Entire revenue expenditure is allowed as deduction 2) Capital expenditure shall be allowed as deduction in five equal installment in five years	Company
36(1)(xii)	Any expenditure incurred by a notified corporation or body corporate constituted or established by a Central, State or Provincial Act, for the objects and purposes authorized by the respective Act is allowed as deduction	Actual expenditure incurred (not being in the nature of capital expenditure)	Notified corporations
36(1)(xiv)	Contribution to Credit Guarantee Trust Fund for micro and small industries is allowed as deduction	Actual expenditure incurred	Public Financial Institutions
36(1)(xv)	Securities Transaction Tax paid	Actual expenditure incurred if corresponding income is included as income under the head profits and gains of business or profession	All Assessee
36(1)(xvi)	Amount equal to commodities transaction tax paid by an assessee in respect of taxable commodities transactions entered into in the course of his business during the previous year is allowed as deduction	Actual expenditure incurred if corresponding income is included as income under the head profits and gains of business or profession	All Assessee
36(1)(xvii)	Amount of expenditure incurred by a co-operative society engaged in the business of manufacture of sugar for purchase of sugarcane.	Deduction would be allowed the extent of lower of following: a) Actual purchase price of sugarcane, or b) Price of sugarcane fixed or approved by the Government	Co-operative society engaged in the business of manufacture of sugar
37(1)	Any other expenditure [not being personal or capital expenditure and expenditure mentioned in sections 30 to 36] laid out wholly and exclusively for purposes of business or profession	Actual expenditure incurred	All Assessee
37(2B)	Expenditure on advertisement in any souvenir, brochure etc. published by a political party shall not be allowed as deduction	Not Allowed	All Assessee

Expenses Deductible Based on Actual Expenditure

The following expenses shall be allowed as deduction if such expenditure are actually paid on or before the due date of filing of return of income:-

Section	Particulars
43B(a)	Any Tax, Duty, Cess or Fees under any Law
43B(b)	Any contribution to Provident Fund/Superannuation Fund/Gratuity Fund/Welfare Fund
43B(c)	Bonus or Commission paid to employees which would not have been payable as profit or dividend
43B(d)	Interest on Loan or Borrowings from Public Financial Institutions/State Financial Institutions etc.
43B(e)	Interest on loan or advance from bank
43B(f)	Payment of Leave Encashment
43B(g)	Sum payable to the Indian Railways for the use of railway assets.