[Sr. No.] 2) Cottage Industry [Amount deductible] Entire profit from such business [Applicability & Conditions] 
For qualifying as cottage industry – Business is to be carried on in a small scale, with limited capital, workers & turnover. Business is carried on by members of society (shareholders) & their families. Business must involve activity of manufacture, production or processing & not merely in trade. It is not required to be registered under Factories Act.