PGBP — Profits and Gains of Business or Profession
What it means
PGBP is the third and typically largest head of income under the Income-tax Act (sections 28–44), charging profits of any business or profession carried on by the assessee, computed after the Act's own allowances (depreciation u/s 32) and disallowances (36, 37, 40, 40A, 43B).
Where you meet it in the CA course
The heaviest chapter of CA Intermediate Paper 3 Section A and a core CA Final Direct Tax area — presumptive schemes (44AD/44ADA), audit thresholds (44AB) and disallowance sections generate perennial exam questions.
Worked example
Net profit per P&L ₹10,00,000; add back disallowed cash payment u/s 40A(3) ₹60,000 and personal expenses ₹40,000; less additional depreciation ₹1,00,000 → PGBP income ₹10,00,000.
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Talk to usWhat are the five heads of income?
Salaries; Income from House Property; Profits and Gains of Business or Profession; Capital Gains; and Income from Other Sources. Every taxable receipt is classified under exactly one head.
What is presumptive taxation under PGBP?
Sections 44AD (small businesses), 44ADA (professionals) and 44AE (transporters) let eligible assessees declare income at prescribed rates of turnover and skip detailed books and audit, subject to conditions.