INCOME TAX UNIT-4 THEORY FULL EXPLANATION | Degree 4th sem Income tax unit-4 full theory in 1video🎯💯

Added: 2026-05-25

[00:00:00]Hello dear students, welcome back to our YouTube channel Learn with Sahira. In this video, we are going to see the complete and clear explanation of unit number four theory from the subject income tax which is for degree fourth semester students. Students, already we have seen problems explanation videos.

[00:00:17]If you didn't watch problems explanation videos, do check out our playlist. The playlist link is available in this video description and playlist name is income tax semester four B.Com. In that playlist, you will be finding all the videos related to your exam preparation.

[00:00:31]Theory, problems, everything has been included in that playlist. And if you are new to our YouTube channel Learn with Sahira, subscribe it for more exam preparation videos. Students, one more important thing I have already prepared damn sure important question and answers notes for all subjects and languages of degree fourth semester. These notes are easy, simple, clear to understand and 100% exam oriented. If you want these notes, message me on my Instagram. My Instagram link is available in this video description. Just message me want notes along group and semester. I will be giving you the access to all the notes, but remember these are paid notes. Yes, there is a small payment for the notes, but believe me you are going to see excellent results with these notes. Only the students who want the notes should text me. Keeping this aside, let us get started. Guys, from unit number four, first important theory question is define depreciation. Explain the conditions for claiming depreciation as deduction. Guys, first let us try to understand what is meant by depreciation. Depreciation means the decrease in the value of business assets because of continuous use, wear and tear, old age, or passage of time.

[00:01:37]Business assets, guys, like machinery, furniture, vehicles, computers, buildings, and all, they will lose their value gradually whenever they are used regularly in business, okay? So, the Income Tax Act allows this reduction in value as a deduction while calculating business income, okay? In simple words, depreciation means the deduction in the value of business assets over time. Just an example, assume that you bought a new mobile phone today. Okay? After few days or after few months, can you buy or can you sell that same mobile for the particular amount for which you bought that mobile? It just assume you bought a mobile for 30,000.

[00:02:22]After 2 months or 3 months, if you sell that mobile, will you get 30,000? No, definitely not, right? Because that mobile has already been used. Yes, it is very new. This has been bought only 2-3 months back. But even though the value of that mobile phone will decrease, that is nothing but depreciation. Now, let us see conditions for claiming depreciation.

[00:02:45]Guys, ownership of assets, the asset should belong to the SSC or business owner. Only the owner of the asset can claim depreciation deduction. For example, if a business owns machinery, then only that business can claim depreciation on that machinery. If the asset does not belong to the SSC, depreciation cannot be claimed. Asset should be used for business. The asset must be used for business or professional purposes. So, depreciation is allowed only when the asset helps in earning business income, guys. For example, machines used in factory, office computers, business vehicles, and all.

[00:03:20]Then, asset must be used during the year. The asset should be used during the previous year. Even if the asset is used for a short period during the year, depreciation may still be allowed according to income tax rules. So, this condition ensures that depreciation is claimed only on assets actually used in business. Then, asset should be depreciable.

[00:03:42]Guys, depreciation is allowed only on assets whose values decrease over time.

[00:03:47]For example, machinery, furniture, vehicles, equipments, computers, and all. But land does not qualify for depreciation, guys, because normally its value does not decrease due to usage, right? Land key value kabhi kam hoti kya? At some points, agar rare cases hai, to kam hoti. Lekin, land ki value kitna dekho, utni badhte ja rahi hai.

[00:04:08]But, it will not decrease. So, it should be depreciable to take the amount, okay?

[00:04:13]Then, depreciation should be calculated as per rules. Depreciation must be calculated according to the rates prescribed under the Income Tax Act, guys. Generally, description depreciation is calculated using the written down value method, okay? WDV method. Different assets have different depreciation rates according to the tax rules, okay? So, yes, depreciation is nothing but reduction in the value of business assets due to continuous use and passage of time. And the Income Tax allows depreciation as a deduction while calculating business income if all required conditions are satisfied. These five conditions should be satisfied.

[00:04:50]Then, we have next question. Explain the expenses allowed in computing business income.

[00:04:55]Guys, while calculating business income, the Income Tax Act allows deduction of expenses that are necessary for running the business, okay? So, basically, these expenses are allowed because they help businesses to earn income and operate smoothly. So, by deducting these expenses, the actual profit of the business can be calculated correctly, okay? So, let us see different expenses which are allowed in computing business income. Rent, rates, and taxes, guys.

[00:05:22]The rent paid for business premises is allowed as deduction. If a business takes a building or shop on rent for office or business activities, then the rent paid becomes a business expense.

[00:05:33]Taxes related to business property are also allowed as deduction, guys. So, these expenses are necessary for running business operations properly, we can say. Repairs and insurance of building, guys. Expenses spent on repairs and maintenance of business buildings are also allowed. For example, repairing office building, painting, maintenance work, insurance premium paid for protecting business buildings is also deductible, we can say. Then repairs and insurance of machinery, machinery and equipment need regular repairs and maintenance for smooth working, right?

[00:06:08]It will not be like a machine or some equipment that will be working every time. Okay, at some point they also need repair. So expenses which are spent on repairing business machinery are also allowed as deduction. Then depreciation, just now we have seen business assets like machinery, furniture, computers, vehicles and all they will lose their value over time because of continuous use. So this reduction of the value is also deducted or we can say the Income Tax Act allows depreciation as deduction while calculating business income, okay? Then we have interest on loan. Businesses often take loans for expansion or daily operations. So interest paid on loans taken for business purposes is also allowed as deduction. For example, guys, if a business takes a loan to buy machinery or run operations, that interest paid becomes deductible.

[00:07:00]Salary and wages, salary, wages, bonus, commission, all this is paid to employees, right? And this is allowed as business expense. So yes, employees help carry out business activities and operations effectively. So these payments are treated as allowable deductions. Then we have our last one, general business expenses, guys. Other necessary business expenses are also allowed as deductions, okay? For example, transport expense, advertisement, office, printing and stationery, communication expense, all these. So these expenses also help business to function smoothly and grow properly. So yes, guys, the Income Tax Act allows deduction of expenses that are directly related to business activities, we can say. This was the complete theory explanation of unit number four. These two are enough, okay?

[00:07:48]If you want to watch problem explanation videos, or if you want to watch all other unit theory explanations, check out our playlist. Playlist link is available in this video description. And for notes, you have to message me on my Instagram. My Instagram ID is learn with Sahira. And link is available in this video description, okay? And yes, if you join our Telegram channel, it will be excellent because there you will be finding important updates. And yes, check out our playlist for all explanation videos. All the very best.

[00:08:18]Bye-bye.