Question 1

Are all income sources of a Housing Society or RWA exempt from tax?

Accepted Answer

No, not all income is tax-exempt. The income of a society is generally assessed under the "Concept of Mutuality." This means that any income generated from the contributions of its own members (such as maintenance charges, sinking fund contributions, or parking fees) is exempt from income tax, because nobody can make a profit out of themselves. However, income generated from non-members or third parties—such as bank interest on fixed deposits, rent from mobile towers on the roof, or billboard hoarding rent—is fully taxable.

Question 2

What happens if our NGO fails to spend 85% of its income during the financial year?

Accepted Answer

Under Section 11 of the Income Tax Act, registered trusts must apply (spend) at least 85% of their total income toward their charitable or religious objectives to claim tax exemption. If you fall short of this 85% threshold, you can still protect the unspent amount from taxation by legally accumulating it. You must file **Form 9A** (if the income was received late in the year and couldn't be spent) or **Form 10** (to accumulate the funds for a specific future project for up to 5 years). Crucially, these forms must be filed *before* filing your ITR-7.

Question 3

How do I determine my exact residential status for income tax purposes?

Accepted Answer

Your residential status in India is determined purely by the number of days you spend in the country during the financial year, not by your passport or citizenship. Generally, you are considered an NRI if you spend less than 182 days in India during the financial year. However, if your total Indian income exceeds ₹15 lakh, the threshold is reduced to 120 days. Determining whether you are an NRI, Resident and Ordinarily Resident (ROR), or Resident but Not Ordinarily Resident (RNOR) is the crucial first step we take before filing your return.

Question 4

Which tax regime is better for salaried employees for FY 2025-26?

Accepted Answer

The new tax regime is now the default and offers a standard deduction of ₹75,000. Under this regime, salaried individuals with an income of up to ₹12.75 lakh generally have zero tax liability due to the Section 87A rebate. However, if you have substantial investments (like Section 80C) or significant exemptions (like HRA and home loan interest), the old tax regime may still be more beneficial. Our experts compute your taxes under both regimes to determine which one minimizes your tax payout.

Question 5

What is Section 44ADA, and how does it benefit freelancers?

Accepted Answer

Section 44ADA is a presumptive taxation scheme designed specifically for recognized professionals and freelancers (like software developers, designers, and consultants). Under this scheme, you can declare 50% of your gross professional receipts as your taxable income, and you are not required to maintain detailed books of accounts. For FY 2025-26, the eligibility limit for Section 44ADA is ₹75 lakh, provided that your cash receipts do not exceed 5% of your total gross receipts.

Question 6

Who is eligible for the presumptive taxation scheme under Section 44ADA?

Accepted Answer

Section 44ADA is exclusively available to "specified professionals" defined under the Income Tax Act. This includes doctors, lawyers, architects, engineers, chartered accountants, interior decorators, and authorized management consultants. Under this scheme, you can declare 50% of your gross professional receipts as taxable income without needing to maintain detailed books of accounts.

Question 7

Is income from F\&O and intraday trading considered a capital gain?

Accepted Answer

No. Income from Futures and Options (F\&O) and intraday equity trading is classified as Business Income, not Capital Gains. Specifically, intraday equity trading is considered "speculative business income," while F\&O trading is considered "non-speculative business income." Because of this classification, you cannot file ITR-1 or ITR-2; you must file **ITR-3** and pay tax according to your applicable income tax slab rates.

Question 8

Is the standard deduction applicable to my pension income?

Accepted Answer

Yes. Regular monthly pension is treated as salary under the Income Tax Act. For FY 2025-26, you are eligible for a standard deduction of ₹75,000 under the new tax regime. If you receive a "Family Pension" (which is taxed under Income from Other Sources), you can claim a standard deduction of ₹25,000 or one-third of the pension amount, whichever is lower, under the new regime.

Question 9

How are my profits from equity shares and mutual funds taxed for FY 2025-26?

Accepted Answer

The taxation of equity and equity-oriented mutual funds depends on your holding period. Short-Term Capital Gains (STCG)—assets sold within 12 months—are taxed at a flat rate of 20%. Long-Term Capital Gains (LTCG)—assets held for more than 12 months—are taxed at 12.5%. However, you receive a tax exemption on the first ₹1.25 lakh of your long-term capital gains every financial year. Our tax experts help you calculate these gains and apply your exemptions accurately.

Question 10

I received an intimation under Section 143(1) with a "tax demand." What does this mean?

Accepted Answer

An intimation under Section 143(1) is an automated preliminary assessment of your return. A tax demand is usually generated if the department’s systems find an arithmetic error, disallow a deduction you claimed, or if the TDS claimed in your return does not match the TDS reflected in your Form 26AS. It is not a full scrutiny notice. We review the intimation, identify the exact mismatch, and can file a rectification request under Section 154 to resolve the discrepancy.

Question 11

How is a Partnership Firm taxed differently from an individual?

Accepted Answer

Unlike sole proprietorships, a partnership firm is treated as a separate legal entity for tax purposes. The net profit of the firm is taxed at a flat rate of 30% (plus applicable surcharge and cess). However, before arriving at the taxable net profit, the firm is allowed to deduct the remuneration (salary/bonus) and interest paid to the partners, provided these are explicitly authorized in the partnership deed and fall within the limits set by Section 40(b).

Question 12

What is the corporate income tax rate for Private Limited Companies in FY 2025-26?

Accepted Answer

The tax rate depends on the regime your company chooses. Under the standard regime, the tax rate is 25% (if your turnover in FY 2023-24 was up to ₹400 crore) or 30% for larger companies. However, most domestic companies now opt for the concessional tax regime under **Section 115BAA**, which offers a flat tax rate of 22% (plus a mandatory 10% surcharge and 4% cess, making the effective rate 25.17%), regardless of turnover. New manufacturing companies may even be eligible for a 15% rate under Section 115BAB.

Question 13

What is the presumptive taxation scheme (Section 44AD) for small businesses?

Accepted Answer

Section 44AD allows small business owners (like retailers, wholesalers, and contractors) to declare their profit at a presumptive rate, eliminating the need to maintain detailed books of accounts. You must declare a minimum profit of 8% for cash transactions and 6% for digital/bank transactions. For FY 2025-26, the turnover limit for this scheme is ₹2 crores, which is enhanced to **₹3 crores** if your cash receipts do not exceed 5% of your total turnover.

Question 14

Can I use Section 44AD if I run an e-commerce business or sell on Amazon/Flipkart?

Accepted Answer

Yes, e-commerce sellers can opt for the Section 44AD presumptive scheme, provided their total turnover is within the ₹2 crore/₹3 crore limits. Because e-commerce transactions are purely digital, you can declare a presumptive profit of 6% on your gross turnover. However, if your actual profit margins are lower than 6%, you must file ITR-3, maintain books of accounts, and claim your actual business expenses.

Question 15

Can I file the simple ITR-1 (Sahaj) form as an NRI?

Accepted Answer

No. Non-Resident Indians are strictly barred from using the ITR-1 form, regardless of how simple or low their Indian income is. If you have only salary, pension, interest, or capital gains in India, you must file **ITR-2**. If you have business or professional income in India, you must file **ITR-3**. Filing the wrong form is a common mistake that automatically results in a defective return notice.

Question 16

I made a loss in the stock market this year. Can I use it to reduce my tax liability?

Accepted Answer

Yes, the Income Tax Act allows you to set off and carry forward eligible capital losses. Short-Term Capital Losses (STCL) can be set off against both short-term and long-term capital gains. Long-Term Capital Losses (LTCL) can only be set off against long-term gains. If you cannot fully set them off this year, you can carry the remaining losses forward for up to 8 subsequent years. However, this is *only* permitted if you file your ITR before the statutory due date.

Question 17

Why did I get a "Defective Return" notice under Section 139(9)?

Accepted Answer

A defective return notice is issued when there is incomplete or inconsistent information in your filed ITR. The most common reasons include filing the wrong ITR form (e.g., filing ITR-1 when you have capital gains), claiming a refund without reporting the corresponding income, or failing to attach a mandatory tax audit report. You have a strict 15-day window to revise and correct the return, failing which the department will treat your return as invalid (as if it was never filed).

Question 18

I have a full-time salaried job but do freelance work on the weekends. Which ITR form should I file?

Accepted Answer

If you earn both salary income and freelance/business income, you cannot file the standard ITR-1 or ITR-2. You must file either **ITR-3** (if you are claiming actual business expenses) or **ITR-4** (if you are opting for the Section 44ADA presumptive scheme). The Income Tax Department tracks your freelance income through TDS deductions and your Annual Information Statement (AIS). Failing to report side-income alongside your salary frequently triggers automated notices.

Question 19

What is the new Form 121, and do I still need to submit Form 15H?

Accepted Answer

Starting April 1, 2026, the Income Tax Department introduced a unified **Form 121**, which completely replaces the older Form 15G and Form 15H. If your total estimated tax liability for the year is zero, you can submit Form 121 to your bank or post office to prevent them from deducting TDS on your fixed deposit and savings interest.

Question 20

Are corpus donations exempt from the 85% application rule?

Accepted Answer

Yes, "corpus donations"—which are voluntary contributions made with a specific written direction from the donor that they form part of the trust's corpus (main fund)—are exempt from the 85% application requirement. However, to maintain this tax-exempt status, the trust is legally required to deposit or invest these corpus funds exclusively in the approved modes specified under **Section 11(5)** of the Income Tax Act (such as bank fixed deposits or government savings certificates).

Question 21

How do I calculate my F\&O trading turnover for income tax purposes?

Accepted Answer

Calculating turnover for F\&O is different from regular businesses because it is based on the absolute profit and loss of your trades. According to ICAI guidelines, F\&O turnover is calculated as the sum of all positive (favorable) differences and negative (unauthorized) differences from your trades, plus the premium received on the sale of options. Correctly computing this turnover is critical because it determines whether a tax audit is mandatory for your account.

Question 22

I switched jobs this year and have multiple Form 16s. How do I file my return?

Accepted Answer

Switching jobs is a common reason for tax notices if not handled correctly. When you change employers, both companies provide a Form 16, and both often factor in the basic exemption limit. If you simply add the incomes together without adjusting the exemptions and tax slabs, it can result in a significant tax shortfall. Our tax professionals consolidate all your Form 16s, recalculate your exact liability, and ensure your taxes are paid correctly before filing.

Question 23

What is the maximum receipt limit to opt for Section 44ADA in FY 2025-26?

Accepted Answer

For FY 2025-26 (AY 2026-27), the standard gross receipt limit to opt for Section 44ADA is ₹50 lakh. However, this limit is enhanced to **₹75 lakh** provided that your cash receipts do not exceed 5% of your total gross receipts. If your gross receipts exceed these thresholds, you must file ITR-3, maintain full books of accounts, and you may be subject to a tax audit.

Question 24

What deductions are available to Cooperative Societies under Section 80P?

Accepted Answer

Section 80P provides significant tax deductions specifically for registered cooperative societies. For example, if a society is engaged in banking or providing credit facilities to its members, 100% of its profits from these activities are deductible. Consumer cooperative societies, cottage industries, and certain agricultural societies also enjoy 100% deduction on their core activities. However, income earned as interest from fixed deposits held in commercial banks is generally *not* eligible for the 80P deduction and remains taxable.

Question 25

What are the limits on partner remuneration under Section 40(b)?

Accepted Answer

Section 40(b) strictly caps the amount of partner remuneration that can be claimed as a business expense. For FY 2025-26, on the first ₹3,000,000 of book profit, the firm can claim up to ₹1,50,000 or 90% of the book profit (whichever is higher). On the balance of the book profit, the limit is 60%. Any remuneration paid above these limits is disallowed and taxed in the hands of the firm at 30%.

Question 26

If I opt for the 22% tax rate (Section 115BAA), do I still have to pay Minimum Alternate Tax (MAT)?

Accepted Answer

No. One of the biggest advantages of opting for the concessional corporate tax regime under Section 115BAA (or 115BAB) is that the provisions of Minimum Alternate Tax (MAT) do not apply. Additionally, you do not have to calculate MAT, nor can you carry forward any past MAT credits. If your company remains in the old/standard tax regime, MAT is levied at 15% (plus surcharge and cess) on your book profits.

Question 27

My clients deduct 10% TDS from my payments. How do I get this money back?

Accepted Answer

When clients deduct 10% TDS under Section 194J (Fees for Professional or Technical Services), that amount is deposited against your PAN and acts as tax already paid on your behalf. When you file your Income Tax Return, we compute your total final tax liability. If the TDS deducted by your clients is greater than your actual tax liability, the excess amount will be issued to you as a tax refund by the Income Tax Department.

Question 28

I only have a regular salary and some mutual fund investments. Which ITR form should I file?

Accepted Answer

Once you sell mutual funds or stocks and realize a capital gain (or loss), you can no longer use the basic ITR-1 (Sahaj) form. You are required to file **ITR-2**. This form requires a detailed, itemized breakdown of your capital gains, including purchase dates, sale dates, and the specific ISIN codes of the assets sold.

Question 29

I am over 75 years old. Am I exempt from filing an Income Tax Return?

Accepted Answer

Under Section 194P, senior citizens aged 75 years and above are exempt from filing an ITR only if they meet very specific conditions: you must have only pension and interest income, both must be deposited in the same specified bank, and that bank must compute and deduct your entire tax liability. If you have any other income—such as rental income, capital gains, or dividend income—you are still required to file your return.

Question 30

What happens if the income shown in my Form 16 does not match my Annual Information Statement (AIS)?

Accepted Answer

The Income Tax Department heavily relies on the Annual Information Statement (AIS) and Form 26AS to track your financial transactions. If your Form 16 shows less income than what is reflected in your AIS (for example, missing bank interest or dividends), filing based purely on your Form 16 will likely trigger a defect notice. Our assisted filing includes a mandatory reconciliation of your Form 16 against your AIS and Form 26AS to ensure complete accuracy.

Question 31

Hospitals and corporate clients deduct 10% TDS from my fees. How do I get this back?

Accepted Answer

Payments made to professionals are subject to a 10% TDS deduction under Section 194J. This amount is deposited with the government against your PAN. When we prepare your ITR, we calculate your actual tax liability based on your total income (using either the 50% presumptive scheme or your actual expenses). If the total TDS deducted exceeds your final tax liability, the difference is claimed as a tax refund.

Question 32

Do I have to pay tax on the income I earn in my country of residence (e.g., USA, UAE)?

Accepted Answer

If you qualify strictly as a Non-Resident Indian (NRI) for the financial year, your foreign income (such as your salary earned in the US or UAE) is not taxable in India. You only pay tax in India on income that is earned, accrued, or received within India (such as rent from an Indian property, capital gains from Indian markets, or interest on Indian bank accounts).

Question 33

Why do e-commerce platforms deduct TDS, and how do I claim it?

Accepted Answer

Under Section 194O, e-commerce operators (like Amazon, Flipkart, Swiggy, and Zomato) are required to deduct 1% TDS on the gross amount of sales facilitated through their platform. This TDS acts as advance tax paid on your behalf and is reflected in your Form 26AS. When we file your ITR, we reconcile these TDS credits against your final tax liability, allowing you to either offset your taxes or claim a refund.

Question 34

Why is the profit shown in my audited balance sheet different from my taxable income?

Accepted Answer

Your financial statements are prepared according to the Companies Act, while your taxable income is computed strictly according to the Income Tax Act. The most common difference is **depreciation**: the Companies Act calculates depreciation based on the "useful life" of an asset, while the Income Tax Act calculates it using specific percentage rates on a "block of assets." We carefully calculate and adjust these differences to arrive at your accurate taxable income.

Question 35

The department sent an inquiry (Section 142(1)) regarding high-value transactions. What should I do?

Accepted Answer

The Income Tax Department continuously tracks high-value transactions—like property purchases, large mutual fund investments, or high credit card payments—via the Annual Information Statement (AIS). If these transactions seem disproportionate to the income declared in your ITR, they will issue a notice under Section 142(1) asking for an explanation and supporting documents. It is crucial to respond factually with bank statements and source-of-fund proofs rather than ignoring it.

Question 36

Is the maximum interest on partners' capital still 12%?

Accepted Answer

Yes. Under Section 40(b), a partnership firm can claim interest paid on the partners' capital accounts as a deductible business expense, provided it is authorized by the partnership deed. However, the maximum allowable interest rate is capped at 12% per annum. Any interest paid in excess of 12% will be disallowed and added back to the firm's taxable income.

Question 37

Does a Cooperative Housing Society need to pay advance tax?

Accepted Answer

Yes. If the society's estimated tax liability for the financial year—arising from taxable income like FD interest, mobile tower rent, or non-occupancy charges—exceeds ₹10,000, it is legally required to pay advance tax. Failing to pay advance tax on time will result in penal interest being levied under Sections 234B and 234C of the Income Tax Act.

Question 38

How are anonymous donations taxed for charitable trusts?

Accepted Answer

Anonymous donations (where the trust does not maintain a record of the donor's name, address, and PAN/Aadhaar) are strictly regulated under Section 115BBC. If a charitable trust receives anonymous donations that exceed either 5% of the total donations received during the year OR ₹1 lakh (whichever is higher), the excess amount is taxed heavily at a flat rate of 30%. Maintaining meticulous donor registers is highly recommended to avoid this tax burden. *(Note: Wholly religious trusts enjoy certain exemptions from this rule).*

Question 39

When is a tax audit mandatory for F\&O and intraday traders?

Accepted Answer

A tax audit under Section 44AB is generally mandatory if your total trading turnover exceeds ₹10 crores, provided that at least 95% of your transactions are digital (which is almost always true for stock market trading). However, if your turnover is lower but you have opted out of the presumptive taxation scheme (Section 44AD) within the last five years and your total income exceeds the basic exemption limit, an audit may also be required. Our tax professionals evaluate your specific turnover to determine if an audit is necessary.

Question 40

I made a loss in F\&O trading this year. Can I carry it forward?

Accepted Answer

Yes, F\&O trading losses are treated as non-speculative business losses. You can set them off against any other business income, capital gains, or income from other sources (except salary) in the current year. If the loss cannot be fully set off, it can be carried forward for up to 8 assessment years to offset future business income. *However, you can only carry forward these losses if you file your ITR on or before the statutory due date.*

Question 41

Can an LLP opt for the presumptive taxation scheme (Section 44AD)?

Accepted Answer

No. While standard registered and unregistered partnership firms can opt for the presumptive taxation scheme under Section 44AD (declaring 6% or 8% profit), Limited Liability Partnerships (LLPs) are strictly excluded from this scheme. All LLPs, regardless of their turnover, must maintain full books of accounts, file ITR-5, and calculate their actual tax liability based on real expenses.

Question 42

Which tax regime is more beneficial for senior citizens?

Accepted Answer

It depends entirely on your investment profile. The new tax regime is highly attractive because it offers zero tax liability for income up to ₹12.75 lakh (including rebates) and lower tax slab rates. However, the old tax regime allows for specific senior citizen benefits, such as Section 80TTB (up to ₹50,000 tax-free interest income) and Section 80D (higher deductions for medical insurance or expenses). Our tax experts run computations under both regimes to ensure you pay the lowest legal amount.

Question 43

Can I claim both HRA and a home loan deduction at the same time?

Accepted Answer

Yes, but only if you opt for the old tax regime. You can claim House Rent Allowance (HRA) exemption if you are paying rent, and simultaneously claim interest deductions under Section 24(b) for a home loan, provided the house you bought is in a different city or you have a valid reason for not occupying it. Note that neither of these deductions is available under the new tax regime.

Question 44

Are there concessional tax rates available for Cooperative Societies?

Accepted Answer

Yes. Traditionally, cooperative societies were taxed at slab rates ranging from 10% to 30%. However, under **Section 115BAD**, resident cooperative societies can now opt for a flat concessional tax rate of 22% (plus a 10% surcharge and 4% cess, making the effective rate 25.17%), irrespective of their total income. However, by opting for this regime, the society must forfeit certain deductions, including those under Section 80P. New manufacturing cooperatives can opt for an even lower rate of 15% under Section 115BAE.

Question 45

Is the interest from my NRI bank accounts taxable?

Accepted Answer

It depends on the type of account. Interest earned on Non-Resident External (NRE) accounts and Foreign Currency Non-Resident (FCNR) accounts is completely tax-exempt in India. However, interest earned on a Non-Resident Ordinary (NRO) account is fully taxable and is subject to a flat 30% TDS (Tax Deducted at Source) by your bank. Our experts help you declare this NRO interest and claim applicable refunds if your total tax liability is lower.

Question 46

Our startup made a loss this year. Will we lose our ability to carry it forward if we raise funding?

Accepted Answer

Generally, under Section 79 of the Income Tax Act, a private company cannot carry forward its business losses if there is a change in shareholding of more than 51%. This is a major issue for startups raising equity rounds. However, if your startup is officially recognized by the DPIIT as an "Eligible Startup," you are exempt from this 51% continuity rule, provided all the original shareholders from the year the loss was incurred remain shareholders in the year the loss is set off.

Question 47

How do I report my cryptocurrency transactions, and can I offset crypto losses?

Accepted Answer

Income from Virtual Digital Assets (VDAs), including cryptocurrency and NFTs, is taxed at a flat rate of 30%, plus applicable surcharge and cess, regardless of your income slab. Under the current tax laws, you *cannot* set off a loss from one crypto asset against the profit from another, nor can you offset crypto losses against any other income head. A 1% TDS (Section 194S) is also applicable on these transactions. We assist in accurately reporting VDAs under the specific ITR schedules to ensure strict compliance.

Question 48

What is the difference between Audit Form 10B and Form 10BB?

Accepted Answer

The Income Tax Department recently overhauled the audit requirements for trusts. **Form 10B** is now mandatory if the trust’s total income exceeds ₹5 crores, if it receives foreign contributions (FCRA), or if it applies any income outside India. **Form 10BB** is required for trusts whose total income is up to ₹5 crores (without any foreign contributions). These statutory audit reports must be filed at least one month *before* the ITR-7 due date to successfully claim your Section 11/12 exemptions.

Question 49

Can I claim deductions for my laptop, internet, and software subscriptions?

Accepted Answer

It depends on how you file. If you opt for the presumptive taxation scheme (ITR-4 under Section 44ADA), the law assumes that all your business expenses (including laptop depreciation, internet, and software) are already covered within the 50% of the income you are not taxed on. If your actual expenses are higher than 50% of your revenue, you can file **ITR-3**, maintain full books of accounts, and claim your exact, actual business expenses and depreciation.

Question 50

Do I need to physically visit the Income Tax Office to resolve my notice?

Accepted Answer

No. Under the government's Faceless Assessment scheme, physical visits to the Income Tax Department are no longer required or permitted for standard notices. All communications, document submissions, and responses must be drafted carefully and uploaded directly through the secure income tax e-filing portal. Our CAs handle this entire online representation process for you.

Question 51

What happens if my GST turnover doesn't match my Income Tax turnover?

Accepted Answer

Mismatches between the turnover declared in your GST returns (GSTR-1/3B) and your Income Tax Return are a primary trigger for automated scrutiny notices. Discrepancies often occur due to timing differences, advance payments, or differing treatments of inclusive/exclusive taxes. Our experts conduct a thorough reconciliation of your GST portal data, your books, and the Annual Information Statement (AIS) to ensure accurate, consistent reporting.

Question 52

Should I file ITR-4 (Presumptive) or ITR-3 (Actual Expenses)?

Accepted Answer

It depends entirely on your profit margins. If your actual professional expenses (like clinic rent, staff salaries, equipment depreciation, and travel) are *less* than 50% of your gross receipts, opting for Section 44ADA (ITR-4) is highly beneficial. However, if your actual expenses exceed 50% of your revenue, it is more tax-efficient to file ITR-3, claim your exact expenses, and pay tax on the lower actual profit.

Question 53

I hold foreign stocks (RSUs/ESPPs) provided by my employer. Do I need to report them if I didn't sell them?

Accepted Answer

Yes. If you hold any foreign assets—including foreign stocks, RSUs, ESOPs of a foreign parent company, or overseas bank accounts—it is mandatory to declare them in **Schedule FA (Foreign Assets)** of ITR-2 or ITR-3. Even if you did not sell the shares or make any profit during the year, failing to disclose these holdings is viewed very seriously and can attract severe penalties under the Black Money Act.

Question 54

I run a small shop. Do I need to get my accounts audited?

Accepted Answer

A statutory tax audit (under Section 44AB) is generally mandatory for businesses if total sales, turnover, or gross receipts exceed ₹1 crore. However, to promote digital transactions, this threshold is increased to **₹10 crores** if your cash receipts *and* cash payments do not exceed 5% of total receipts and payments. Alternatively, an audit is required if you opt out of Section 44AD within five years and your income exceeds the basic exemption limit.

Question 55

I receive payments from foreign clients in USD (via PayPal, Upwork, or wire transfer). How is this taxed?

Accepted Answer

Foreign income earned from freelancing is taxed exactly the same as domestic professional income under the Income Tax Act. The income is converted to Indian Rupees (INR) and added to your gross receipts. You can still apply Section 44ADA to foreign income. Please note that while foreign services are considered "zero-rated" for GST, tracking your Foreign Inward Remittance Certificates (FIRC) and ensuring proper bank reconciliations is critical to proving the income source to the tax department.

Question 56

Can I file my company's ITR-6 using Aadhaar OTP or EVC?

Accepted Answer

No. Unlike individuals or standard partnership firms, the Income Tax Department mandates that all companies (including Private Limited, Public Limited, and One Person Companies) must digitally sign their Income Tax Return (ITR-6) using a valid **Class 3 Digital Signature Certificate (DSC)** of an authorized director. Aadhaar OTP or EVC is not permitted for company filings.

Question 57

Am I legally required to maintain formal books of accounts?

Accepted Answer

Under Section 44AA of the Income Tax Act, specified professionals are strictly required to maintain books of accounts (like a cash book, journal, and ledger) if their gross receipts exceed ₹1.5 lakh in all three preceding years. However, if you opt for the Section 44ADA presumptive taxation scheme, you are legally exempted from maintaining these detailed records.

Question 58

I only have salary income. Which ITR form should I file?

Accepted Answer

If your total income is up to ₹50 lakh and consists only of salary, one house property, and interest income, you generally need to file ITR-1. However, if your salary exceeds ₹50 lakh, or if you also have capital gains, multiple house properties, or foreign assets, you must upgrade to ITR-2. As part of our service, we automatically select the correct ITR form for your specific income profile.

Question 59

How is an intraday trading loss treated differently from an F\&O loss?

Accepted Answer

Intraday trading is classified as a "speculative business." Speculative business losses are heavily restricted: they can *only* be set off against speculative business profits. You cannot use an intraday loss to reduce your tax on F\&O profits, salary, or capital gains. Furthermore, speculative losses can only be carried forward for up to 4 assessment years (compared to 8 years for F\&O losses).

Question 60

Which ITR form must a Cooperative Society or RWA file?

Accepted Answer

The form depends on the registration and purpose of the society. Standard Cooperative Housing Societies, Credit Societies, and Resident Welfare Associations (RWAs) are required to file **ITR-5**. However, if the society is registered as a charitable institution under Section 12A/12AB of the Income Tax Act and its primary purpose is charity (rather than member welfare), it must file **ITR-7**.

Question 61

Do the individual partners still need to file their own ITR?

Accepted Answer

Yes. The partnership firm files **ITR-5** to report its business income. However, the individual partners must also file their personal tax returns (usually **ITR-3**). The remuneration and interest received by the partners from the firm must be declared as "Business Income" in their personal ITR. Notably, the share of profit distributed to partners after the firm has paid its 30% tax is entirely tax-exempt in the hands of the individual partners under Section 10(2A).

Question 62

Is the lump-sum pension I received at retirement taxable?

Accepted Answer

A commuted pension (the lump-sum amount received at retirement) is fully exempt from income tax for government employees. For private-sector employees, it is partially exempt depending on whether you also receive a gratuity. However, the uncommuted pension (your regular monthly pension payout) is taxable as standard salary income for both government and private employees.

Question 63

Can our trust lose its tax-exempt status if we file our ITR late?

Accepted Answer

Yes. Filing your **ITR-7** on or before the statutory due date is a mandatory condition to claim tax exemptions under Sections 11 and 12\. If a trust files a belated return, it automatically loses its tax exemptions for that year, meaning the entire surplus will be taxed at standard rates. Furthermore, consistently failing to file returns or maintain proper books of accounts can trigger the permanent cancellation of your Section 12AB registration by the Commissioner of Income Tax.

Question 64

I sold a property in India and the buyer deducted over 20% TDS. How do I get a refund?

Accepted Answer

Under Section 195, buyers are legally required to deduct TDS at a flat rate of 20% (plus applicable surcharge and cess) on the *entire sale value* (or capital gains if a lower deduction certificate was obtained) when buying property from an NRI. This TDS often far exceeds your actual capital gains tax liability. To claim a refund of this excess TDS, you must compute your exact Long-Term Capital Gains (LTCG) and file your Income Tax Return in India.

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