Understanding Allowable Deductions under Section 36 of the Income Tax Act

Insurance Premium Deductions: Protects stock-in-trade against damage or destruction. Covers cattle life insurance and health insurance for employees. Bonus or Commission to Employees: Deductible if not in lieu of dividends or profits. Subject to section 43B provisions. Interest on Borrowed Capital: Deductions for interest paid on borrowed capital. Exceptions apply for capital borrowed for specific purposes.

Discounts on Zero-Coupon Bonds: Deductions available, amortized over bond life. Employer Contributions: Deductions for provident fund, superannuation fund, and NPS. Limited to specified amounts. Allowance for Dead Animals: Deductions for capital expenditure on animals. Deductible amount adjusted for proceeds from sales.

Bad Debts Written Off: Deductions allowed for bad debts related to business. No deduction for bad debt provisions. Special Reserves and Family Planning: Deductions for profits transferred to special reserves. Amortized family planning expenditure over five years.

Securities Transaction Tax: Deductions for securities transaction tax paid. Expenditure by Co-Operative Societies: Deductions for sugarcane purchases by cooperative societies. Marked to Market Loss: Deductions for marked-to-market losses as per standards. These deductions under Section 36 of the Income Tax Act provide businesses and professionals with avenues to reduce taxable income, promoting investment and growth.