Business Individuals and Association of Persons (AOP) are taxed at the same rate, professionals, businesses and all other businessmen are required to maintain record of transaction for instance, purchases, sales, receivable amounts from customers, payable amount to suppliers & vendors, asset and properties of the business.
All business assets shall be treated separately from personal assets of individual, business assets are collectively call as business capital. Similarly all business liabilities and obligation are treated separately.
Depreciation expense on business assets is admissible expense, it means depreciation expense shall be deducted from the revenues/ sales while determining profit of a business and AOP. Like depreciation there are many other expenses and expenditures which are admissible but not deducted from the revenues while determining the profit of the firms, as mostly unregistered businesses and Partnership firms.
To avail imposition of penalties due to non maintenance of record is common, as mostly businesses do not maintain proper record for filing tax return and determination of profit. Usually tax returns are filed by the small and even media sized business on the basis or estimated data or to adjust the tax deductions on utility bill, banking transaction and business transactions. This lead to non availability of data and accounting record when call for record is made either by tax authorities or other regulatory authority. Further keeping record of transactions and proper calculation of profit is necessary to avail banking facilities, enter in bids/tenders and production of record to government authorities as and when demanded.
