How to Show Personal Tour as Business Travel and Claim Expenses in India

In India, any person who earns above the base tax slab from his business or profession is legally obliged to pay Income Tax as in the rate, in which slab he falls, notified by the Government of India in a financial year. However, the Income Tax Act 1961 allows professionals and businessmen to deduct expenses incurred while performing profession or business in the financial year from the net income in the same period. Cost of travelings for the purpose of business and profession is one of the major areas where you can save your hard earned money from paying Tax.

In this article, you will learn which all travels are counted as business travel and how to mention business travel cost in your Income Tax Return and claim Tax exemption.

Why Should We Include Business Travel Expenses in IT Return?
Income Tax Act allows any person to deduct the amount he spent on travels he made in order to perform his business and profession. Here profession means a work done by a person in order to make a living usually in a self-employed manner.

So anyone who makes earning by using his intelligence or physical strength (not salaried employees) like a practicing doctor, CA, Lawyers, Freelance Engineers, Bloggers etc can be termed as professionals.

Traveling for the sole purpose of profession and business is common among these people and Tax authorities understand it well. So they are allowed to deduct any money they spent on travels associated with pursuing an existing business.

So the total revenue under 'Profits and Gains of Business or Profession' is the amount after deducting all expenses including business travel expenses.
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Which Type of Travel Expenses Are Counted As Business Travel Expenses
It is important to note that, not all your travel expenses can be treated as business travel expenses and you cannot blindly ask tax deductions for those. Income Tax Department will look into the nature of your journey and they must be convinced that the trip you made was essential for your business or profession.

Another point Tax authority will check is the travel cost. You cannot claim unbelievable cost for the journey and demand Tax exemption while submitting your ITR.
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How Can I Show My Vacation Tour As Business Tour to Cut Tax?
You might be disappointed after listening to the answer. You cannot claim any Tax deductions for your vacation trips. For example, if you went to Manali for a week to enjoy with your family for the purpose of entertainment, you cannot show the cost of this journey as a business expense in ITR. However, if you met some potential clients and you spent any money to arrange a meeting with them, you can claim that amount as a business expense.
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Important Points to Remember While Claiming Business Travel Expense
  1. Keeps All Bills and Receipts
    First of all, you must keep the receipts and bills related to the journey and all documents which prove why this trip was necessary for your business.

  2. Sole Purpose of The Travel Must be Business
    It is not necessary that you made any business during this journey but you must show Tax authority that this tour was for the sole purpose of your existing business. You cannot claim a trip as business trip if that trip is not related to any of your existing business or profession.

    In simple words, you cannot ask Tax benefits for the trip made for the needs of the future business. For example, if you are in the catering business and you are planning to start a construction business.

    As long as you have not started a construction business, you cannot claim tax relaxations as business travel for any of your trips related to your intention on future construction business.

  3. Travel Cost Must be Realistic
    You cannot claim an unrealistic amount as your business travel cost. You must also show the authority the mode of transport and where you stayed. You can include Hotel room rent you paid, laundry bills, Internet and phone bills (must be related to your existing business), meals bill etc in the travel expense.

  4. Travel Requirement Must be Justified
    Another important point you should remember while marking a journey as a business journey is the point whether you can justify the intention of that trip. For example, if you are a businessman in Delhi and want to purchase an item which is available in Delhi.

    If you go to Mumbai for the sole purpose to purchase that item without much difference in quality or price from Delhi market, you cannot justify that trip.

  5. Mode of Payments
    It would be helpful for you while showing travel expenses if you made the digital mode of payments as much as possible.
Which All Expenses Can be Included Under Travel Cost
You can include the cost of the mode of transport you used, room rent you paid, meals and other petty expenses while journeying, laundry bill, tolls if you paid any during the drive, entry fee you paid if it was necessary for your profession, cost of arranging meetings with potential clients etc.