Anil Rego, CEO, Right Horizons, answers your personal income tax queries.
Ram Babu: I'm a freelance software engineer, in a financial year my gross receipts are ₹24 Lakhs, expenses are ₹50,000. Can I opt for presumptive taxation section 44ADA & declare 50% (₹12 Lakhs) as my expense?
If I do so will I be in trouble in the future for underreporting my income & the IT department wants to know the source of remaining income?
And also should I be collecting GST? All my clients are from US & UK.
Anil Rego:Section 44ADA eligibility is based on the nature of services that you provide. Technical consultancy for example is eligible.
Further, one is eligible if your total gross receipts are less than Rs 50 lakh in a year.
Under the Presumptive scheme,
Higher of the following is offered as presumptive income:
- 50% of the total receipts from the profession Income offered by the assessee from the profession
- Actual expenses
By following Section 44ADA, an assessee would get the following benefits:
- No need of maintaining books required under Section 44AA
- No requirement of having accounts audited under Section 44AB
Considering the complexity, it is better you avail the services of a Chartered Accountant, so that he can look at all the finer details of your case.
Dinesh Merani: I am LIC policy holder of single premium plan (sum assured: Rs 5 lakhs; policy term: 9 years) under which single premium of Rs 3.30 lakh was paid in Nov 2011. Thereafter, survival benefit of Rs 75,000 each was received in 2014 and 2017. The policy matured in Nov 2020 with receipt of net maturity proceeds of Rs 3.77 lakhs.
As per my form 26 AS for FY2021 (AY 2022) amount of Rs 2.05 lakhs is shown to be received from LIC against which TDS of Rs 7,688 is booked. (2.05 L = 75k + 75k + 3.77L + 7688- 3.3 L).
While filing ITR for FY2021 (AY2022), please let me know if I can show income of Rs 55,000 (net of premium) against LIC maturity proceeds despite form 26AS showing income of Rs 2.05 lakhs?
Anil Rego: Under Section 10 10(D), the entire maturity proceeds will be taxable in the year of receipt and must be shown as income while filing one's income tax return.
Vijay Gupta: I am filing my ITR using form 3, (having income from Profession – ‘Accounting and book keeping services' as per section 44AA, I don't have to maintain books of accounts. I have CFL - STCL and LTCL). As required, I have attached the PDF file for the query.
I have again used the Offline utility version: 1.0.17, and have only one point unresolved, which is not getting the correct offset of LTCG for current year, FY 2020-21 which is only Rs.27,539.00 (Current year STCL: 89.00 and LTCG is Rs.27628.00). This Capital gain falls under the category of Section 112A and the MF were acquired after January 2018. As per the provision of Income tax, there is an exemption up to Rs.1,00,000.00 is available, which is not being computed by the utility. Utility is offsetting this profit against CFL of earlier years instead of providing exemption in current year. Kindly guide how to proceed with this?
Anil Rego: Try using the latest offline utility or file the returns in online mode.
John James: I retired from a PSU in January 2021 on attaining 60 years. I have not withdrawn my PF amount. Some people have advised me not to withdraw, as it will earn interest for 3 years. Is it correct?
Anil Rego: Yes, you will continue to earn interest for this period.
Jitendra Soni: Sir my query is as under.
I am 56 years. I am from Ahmedabad. In May 2015, 1000 shares of "DHFL" were bought from the market at a price of Rs. 2,00,000. But DHFL went bankrupt. Therefore, the price of DHFL no longer in the stock market. But I still have 1000 shares in my demat account which is now worth zero. So I lose 2,00,000 in capital. So how do I compensate for this loss? Sir, please guide me.
Anil Rego: According to NCLT approved resolution plan, the existing shares of DHFL will be delisted and then will be extinguished. You have two options- to sell it now as an off-market transaction at a nominal price to someone; or wait for the shares to get extinguished. You can then claim the capital loss at value sold; or at zero value in case the shares are extinguished. You should at least take the benefit of capital loss and set it off against other capital gains by using one of the above.
Do you have any personal income tax query? Please mail us at email@example.com with the subject line 'Ask Anil' and Anil Rego will answer all your tax queries.
Anil Rego is the founder and CEO of Right Horizons, an investment advisory and wealth management firm that focuses on providing financial solutions that are specific to customer needs.
You can find more of Mr Rego's answers here.
Feature Presentation: Ashish Narsale/Rediff.com