Primarily, the expenses allowable for computing business income is computed as per the Income tax Rules for the purpose of computing tax liability of a concern, where business income in the concern is computed by the  accepted business and accounting norms, and in accordance with the method of accounting, regularly employed by the taxpayer. Thus, whatever constitutes a legitimate outgoing of a business is generally allowed as a deduction in computing the business income. Some important business expenses which are allowed for deduction as per the Income Tax Act are as follows- 1) Rent, rates, taxes, repairs and insurance of premises used for the purpose of business or profession. 2) Repairs and insurance of machinery, plant and furniture used for the purpose of business or profession. 3) Depreciation of building, machinery, plant and furniture owned by the taxpayer and used for the purpose of business or profession, being tangible assets or know-how, patents, copyrights, trade marks, licenses, franchises or any other business or profession or commercial rights of similar nature being intangible assets acquired wholly or partly owned. 4) expenditure (both revenue and capital) on scientific research related to business or by way of contribution to a university, college or an approved association or institution for being used for scientific research. 5) premium paid by employer in respect of insurance against risk of damage or destruction of stocks and stores used for business or profession. 6) Insurance premium by a federal milk co-operative society. 7) premium paid by employer in respect of health insurance of the employees, provided it is paid otherwise than by way of cash. 8) Bonus and commission to employees. 9) Interest on borrowings for the purpose of business or profession. 10) Prorata amount of discount on a Zero Coupon Bond. 11) Contribution to a recognized provident fund, an approved superannuation fund or an approved gratuity fund 12) Employee’s share of contribution to any PF super annuation fund or ESI or other welfare fund is allowable as deduction if paid within prescribed time. 13) Write off allowance for animals used for the purpose of business or profession (not as stock-in-trade). 14) bad debts 15) Provision for bad debts relating to rural branches of commercial banks 16) Transfer to special reserve