Business

ASK US

Q. I have been working as a freelancer since November 2019 after I quit my regular job. I have been getting the payment deposited, after TDS, into my account. The total payment is equal to ₹15 lakh. Please guide me for filing ITR for FY 2019-20.

Mohammed Arif

A. You may opt for Presumptive Tax Scheme for Professionals under section 44ADA of the Act if your profession is eligible under the scheme and gross receipts are less than ₹50 lakh. As on date, the following professions are notified viz. interior decoration, technical consulting, engineering, accounting, legal, medical, architecture.

Other professionals, as mentioned below:

a. Movie artistes including a producer, editor, actor, director, music director, art director, dance director, cameraman, singer, lyricist, story writer, screenplay or dialogue writer and costume designers

b. Authorised representative, meaning a person who represents another person for a fee before a tribunal or any authority constituted under any law.

As your gross receipts are lower than ₹50 lakh, you may be eligible under this scheme if your profession is covered and you are required to declare a profit/gain under profession of minimum 50% of the gross receipts based on the expenses incurred in connection with your profession. You will be required to file ITR-4 and calculate tax according to the slab rates and in consideration of your other income, if any.

If your profession is not covered in the above list, you may choose to opt for Presumptive Tax under section 44AD of the Act as your gross receipts are lower than ₹2 crore. Mention your profession properly under the business codes available. Under this scheme, you will be required to declare a profit/gain of minimum 8% (other modes) and 6% (digital modes) based on the expenses incurred in connection with your profession. You will be required to file ITR-4 and calculate tax according to the slab rates and in consideration of your other income, if any. Benefits under the above schemes are maintenance of books of accounts are not compulsory and there is no need for auditing.

Q. I retired from the Southern Railway and get a monthly pension of about ₹40,000. I also get a monthly family pension of ₹30,000. What is the eligible amount that can be deducted from my family pension?

K.M. Krishna

A. Deduction of a sum equal to one-third of family pension received or ₹15,000, whichever is lower, can be claimed under section 57(iia) of the Income Tax Act, 1961. In your case, you will be eligible for a deduction of ₹15,000 for AY 20-21. The same is to be declared as “Income from Other Sources” in the respective ITR as applicable to you.

Q. I am a 30-year-old male working in an IT firm. I plan to create an HUF. I need information on funding the HUF account.

S. Venkatesh

A. HUF can be funded by the members of the HUF by gifting monies into the HUF account thus forming the capital of the HUF. You may use your funds derived from any source, including salary, to gift the HUF. This does not attract any tax in either the HUF’s hands or in your hands and there is no limit of gifting by members of the HUF to the HUF. However, any income derived by the HUF from the monies gifted by you by way of investments/business through the HUF will be taxed in your hands under the clubbing provisions of the Income Tax Act. However, if the HUF invests in any tax-free instrument, the returns, along with the initial investment in the instrument, can be invested in any manner and no clubbing provisions will apply, post which the tax will be charged at rates/slabs as applicable to the HUF.

(The author is partner, GSS & Associates, Chartered Accountants, Chennai)

This article is closed for comments.
Please Email the Editor

Printable version | Jan 19, 2021 6:31:01 PM | https://www.thehindu.com/business/ask-us/article33202223.ece

Next Story