Add Direct and Indirect Expenses for Business
Adding business expenses accurately is essential for reducing your taxable income and ensuring correct profit reporting under the Income from Business & Profession head.
What are Direct and Indirect Expenses?
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Direct Expenses
These are costs directly related to the production of goods or services—such as raw materials, wages for production staff, or freight. They vary with your level of output.
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Indirect Expenses
These are overhead costs required to run your business, but not linked to the production of a specific product or service. Examples include rent, utilities, marketing, or administrative salaries.
Add Direct Expenses
When entering your business income, you'll find a section for Direct Expenses:
- Enter the relevant details like expense category, description, and amount.
- These are typically linked to sales or cost of goods sold.
Add Indirect Expenses
Once you’ve added your business income:
- Go to the Expenses tab
- Click Add Expense Details
- Select the appropriate:
- Expense Head (e.g., Rent, Utilities, Salaries)
- Expense Sub Head (e.g., Office Rent, Electricity Bill)
- Add an optional description
- Enter the amount and click Save
Why It Matters
- Claiming valid business expenses helps you lower taxable profits
- Helps maintain accurate Profit & Loss (P&L) and Balance Sheet records
- Ensures compliance with income tax regulations
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