We all know that a freelancer or a business is allowed to deduct business expenses from their business income. No expenses are deductible from salary income as such. However there certain expenses are allowed to be deducted against some incomes from other sources –
- Commission or remuneration for realising dividends (if not covered under section 115-O which is exempt) or interest on securities – If any money or commission has been paid for releasing a dividend, such expenses are allowed to be deducted from the dividend income which is taxes under income from other sources.
- Current expenses (not capital expenses) such as repairs, insurance premium and depreciation in respect of plant, machinery, furniture and buildings are deductible from rent income earned by letting out of plant, machinery, furniture and building, which are chargeable to tax under income from other sources. As we know income from letting out of plant & machinery is chargeable under income from other sources, expenses incurred on such plant & machinery is allowed to be deducted.
- A standard deduction is allowed from family pension – A deduction which is the lower of Rs. 15,000 or 1/3rd of such income is available in case of income in the nature of family pension which is paid monthly to the family members of the deceased employee
- In case of interest on compensation or enhanced compensation received – 50% of interest is allowed as a deducted (applicable starting assessment year 2010-11)
- As per section 57(iii), deduction is allowed for any other expense (which is not a capital expenses) which has been spent wholly and exclusively for making or earning such income.