New Deduction Rule in Section 44A: Trade Associations Can Offset Deficiencies Against Business Profits and Other Income

Section 44A of the Income Tax Act provides a special deduction for trade, professional, or similar associations whose income is not distributed to members. The deduction applies to the general receipts from members, excluding specific service fees, after subtracting general expenditures for member interests, excluding capital and otherwise deductible expenses. A negative result, termed a deficiency, is deductible under the head of Profit and Gains of Business or Profession (PGBP). If the deficiency exceeds PGBP income, it can be deducted from other income heads, but cannot exceed 50% of total income pre-deficiency deduction. This deduction is applied after accounting for other deductions and losses.