Section 27: manner of computing profits and gains of business or profession

Introduction

Section 26 identifies what falls under business or professional income. Section 27 then points to the ordinary computation provisions and explicitly excludes Section 58 from that cross-reference.

Key takeaways

What Section 27 says

"The income referred to in section 26 shall be computed as per the provisions of sections 28 to 60, except section 58."

What this means in practice

This section is a signpost rather than a substantive rule - the actual mechanics of computing business/professional profits (allowable expenses, depreciation, specific deductions and disallowances, and so on) are spread across sections 28 to 60.

Section 58 is specifically carved out from this computational chain, meaning it does not apply to the computation of income under section 26 in the way the other sections in that range do.

Where the computation rules sit

Start with the income categories in Section 26, then apply the relevant deduction, disallowance and special-computation rules in Sections 28–60.

Section 58 is a distinct presumptive route and is expressly excluded from Section 27's reference; check its own eligibility rather than folding it into an ordinary computation.

Step-by-step flow for applying Section 27

1. 1

   Is the income referred to in Section 26 (profits and gains of business or profession)?

   • No: Section 27 does not apply.
   • Yes: Go to the next step.
2. 2

   Is the assessee using the route in Section 58?

   Section 58 is expressly excluded from the general computation direction in Section 27.

   • Yes: Check Section 58's own conditions and computation.
   • No: Go to the next step.
3. 3

   Compute the income by applying Sections 28 to 60 (other than Section 58)

Practical checklist

Glossary

Computation provision

A rule used to calculate taxable income under an income head after its chargeability is established.

Frequently asked questions