# Computing PGBP Income from the P&L Account [Section 29]
Section 29 mandates that PGBP income shall be computed in accordance with Sections 30 to 43D. In practice, the starting point is the Profit & Loss Account prepared as per the books of account, which is then adjusted.
## The Standard Reconciliation Format
| Particulars | Amount |
|---|---|
| Profit / (Loss) as per P&L A/c | XX |
| Add: | |
| Depreciation debited to P&L A/c | XX |
| Expenses debited to P&L A/c but NOT allowed as deduction (disallowed) | XX |
| Income NOT credited to P&L A/c but taxable under PGBP | XX |
| Subtotal | XX |
| Less: | |
| Depreciation as per Income-tax Act (Section 32) | (XX) |
| Expenses NOT debited to P&L A/c but allowed under PGBP | (XX) |
| Income credited to P&L A/c but NOT taxable under PGBP (e.g., Capital Gain, IFOS, Agricultural Income, dividends) | (XX) |
| Income from Business & Profession (PGBP) | XX |
## How to Use This Format
Step 1 — Add back book depreciation: Accounting depreciation is irrelevant for tax. Add it back, then deduct depreciation as per Section 32.
Step 2 — Add back disallowed expenses: These include personal expenses, expenses prohibited by law (e.g., bribes, penalties), expenses where TDS was not deducted (Section 40(a)(ia)), and many others as per Sections 36, 37, 40, 40A, 43B.
Step 3 — Add back PGBP incomes missed in books: Sometimes a receipt is taken directly to capital reserve in books — but is taxable under PGBP. Add back.
Step 4 — Deduct expenses allowed but not booked: Rare, but e.g., depreciation allowable but not booked, or items allowed first time on a payment basis.
Step 5 — Remove non-PGBP incomes from the figure: Rental income, dividends, capital gains, interest on FDR, agricultural income — these are taxable under their own respective heads, so they must be removed from P&L profit to avoid double counting.