Yes, the monthly fixed amount you receive from a trust established by your father is subject to taxation under the Income Tax Act, 1961. The tax implications depend on the nature of the trust and its income distribution. Here's a breakdown: 1. Revocable vs. Irrevocable Trusts Revocable Trust: If youRead more
Yes, the monthly fixed amount you receive from a trust established by your father is subject to taxation under the Income Tax Act, 1961. The tax implications depend on the nature of the trust and its income distribution. Here’s a breakdown:
1. Revocable vs. Irrevocable Trusts
Revocable Trust: If your father retains control over the trust, making it revocable, the income generated is taxable in his hands.
Irrevocable Trust: If the trust is irrevocable, meaning your father has relinquished control, the taxation depends on the type of trust:
Specific (Determinate) Trust: If the trust deed specifies that you are entitled to a fixed monthly amount, this income is taxable in your hands as “Income from Other Sources.”
Discretionary Trust: If the trustee has discretion over income distribution, the trust is taxed at the maximum marginal rate, and the income is taxed in your hands only upon distribution.
2. Tax Rates and Deductions
Tax Rate: The income you receive is taxed according to your applicable income tax slab rate.
Deductions: You may be eligible to claim deductions under Sections 80C to 80U, depending on your specific circumstances.
3. Documentation
It’s essential to maintain proper documentation, including the trust deed and any income statements, to accurately report this income on your tax return.
Given the complexities involved in trust taxation, it’s advisable to consult a tax professional to ensure compliance with all applicable tax laws and to optimize your tax planning.
The salary or professional fees earned by your wife may or may not be clubbed with your income, depending on the nature of employment and the relationship between your income and her earnings. Let’s break it down: 1️⃣ When Wife’s Income is NOT Clubbed? ✅ ✔ Genuine Salary from an Unrelated Employer:Read more
The salary or professional fees earned by your wife may or may not be clubbed with your income, depending on the nature of employment and the relationship between your income and her earnings. Let’s break it down:
1️⃣ When Wife’s Income is NOT Clubbed? ✅
✔ Genuine Salary from an Unrelated Employer:
If your wife works independently for a company, firm, or any unrelated employer, her salary is taxed in her hands, and clubbing provisions do not apply. ✔ Professional Fees from Independent Work:
If she is self-employed and earning fees from clients, it remains taxable in her hands. ✔ When She Has a Separate Business:
If she is running her own independent business, her income is not clubbed with yours.
2️⃣ When Wife’s Income is Clubbed? ❌
📌 Salary from a Concern in Which You Have Substantial Interest (Section 64(1)(ii))
If your wife is drawing salary, commission, or fees from a business or company in which you have a substantial interest (i.e., you hold at least 20% equity or voting power), then her salary is clubbed with your income.
This applies only if her role is not based on her professional qualifications or expertise.
📌 Example:
If you own a private limited company (where you hold more than 20% shares) and your wife is getting a salary without any actual work, it will be clubbed with your income.
However, if she is qualified for the role (e.g., a CA earning salary in your accounting firm), her income remains taxable in her own hands.
3️⃣ What About Partnership Firm Income?
If your wife receives a share of profit from a partnership firm where you are a partner, it is not clubbed as profit-sharing is tax-free under Section 10(2A).
However, if she receives a salary from the firm and she does not contribute to the business, her salary might be clubbed.
Key Takeaways:
✔ Independent salary/professional fees = Taxed in her hands ✅ ✔ Salary from a business where you hold 20%+ = Clubbed with your income ❌ ✔ If she is qualified for the job, her income is not clubbed ✅ ✔ Salary from an unrelated company = Taxed separately ✅
If you have transferred a commercial property to your wife without any consideration (i.e., as a gift), the rental income received by her will not be taxed in her hands but will be clubbed with your income under Section 64(1)(iv) of the Income Tax Act, 1961. How the Rental Income is Taxed? 🔹 ClubbinRead more
If you have transferred a commercial property to your wife without any consideration (i.e., as a gift), the rental income received by her will not be taxed in her hands but will be clubbed with your income under Section 64(1)(iv) of the Income Tax Act, 1961.
How the Rental Income is Taxed?
🔹 Clubbing of Income: Since the transfer was made without adequate consideration, the rental income will be added to your taxable income and taxed as “Income from House Property” in your hands.
🔹 Standard Deduction: Under Section 24(a), you can claim a 30% deduction on the rental income as a standard deduction.
🔹 Interest on Loan Deduction: If there is an outstanding home loan on the property, you can claim a deduction under Section 24(b) for the interest paid on the loan.
es, your son's earnings from singing on stage are taxable under the Income Tax Act, 1961. The classification of this income depends on the nature and frequency of his performances. Here's how it is taxed: 1️⃣ Professional Income (Section 28 & 44ADA - Profits & Gains of Business or ProfessionRead more
es, your son’s earnings from singing on stage are taxable under the Income Tax Act, 1961. The classification of this income depends on the nature and frequency of his performances. Here’s how it is taxed:
1️⃣ Professional Income (Section 28 & 44ADA – Profits & Gains of Business or Profession)
If your son regularly performs as a singer, his income is classified as “Income from Profession” under the head Profits & Gains of Business or Profession (PGBP).
He can deduct expenses related to his performances (travel, costumes, equipment, training, etc.).
If his annual professional income is less than ₹50 lakh, he can opt for the Presumptive Taxation Scheme under Section 44ADA, where 50% of his income is deemed as expenses and only the remaining 50% is taxable.
✅ Example: If he earns ₹10 lakh in a year from singing, under 44ADA, only ₹5 lakh will be taxable.
2️⃣ Income from Other Sources (Section 56)
If he sings occasionally (not as a profession), the income is taxed under “Income from Other Sources” (IOS).
No presumptive taxation applies, but he can claim actual expenses related to the performance.
3️⃣ Clubbing of Income (If Minor) – Section 64(1A)
If your son is below 18 years of age, his income is usually clubbed with the parent’s income.
However, since this is his own professional skill-based income, it is NOT clubbed and is taxed in his own hands.
4️⃣ Tax Deducted at Source (TDS) & GST Applicability
If event organizers or companies pay him, TDS may be deducted at 10% (under Section 194J – Professional Fees).
If his earnings exceed ₹20 lakh per year (₹10 lakh for NE states), he may also need to register for GST and charge 18% GST on his professional services.
Yes, losses can also be clubbed under the Income Tax Act, 1961, in cases where income is required to be clubbed as per Section 64. This typically happens in situations where income from one person (such as a spouse, minor child, or specified relative) is added to another person's income. When Can LoRead more
Yes, losses can also be clubbed under the Income Tax Act, 1961, in cases where income is required to be clubbed as per Section 64. This typically happens in situations where income from one person (such as a spouse, minor child, or specified relative) is added to another person’s income.
When Can Losses Be Clubbed?
1️⃣ Income from Transferred Assets (Section 64)
If an individual transfers an asset (without adequate consideration) to their spouse or minor child, the income from that asset is clubbed with the individual’s income.
If the asset generates a loss, that loss must also be clubbed in the same manner.
2️⃣ Minor Child’s Income (Section 64(1A))
If a minor child earns income, it is generally clubbed with the parent’s income.
If the child’s income results in a loss, that loss can also be clubbed with the parent’s income and set off accordingly.
Exception: If the child has a disability under Section 80U, their income/loss is not clubbed.
3️⃣ Partnership Firm or HUF Cases
If an individual transfers an asset to a partnership firm or HUF where they have a substantial interest, the profit/loss from that asset is clubbed with their income.
Example Scenario
🔹 A father gifts ₹5 lakh to his minor child, who invests it in stocks and incurs a loss of ₹50,000. Since the child’s income is clubbed with the parent’s income, the loss is also clubbed, and the parent can use it for set-off.
🔹 A husband transfers a property to his wife without consideration. If the wife incurs a rental loss, the husband must club that loss with his income.
The Income Tax Act allows taxpayers to adjust losses from one source of income against another source of income within the same head. This is called intra-head adjustment and helps in reducing taxable income. Key Rules for Set-Off of Losses Under the Same Head: ✅ Business Loss: Loss from one businesRead more
The Income Tax Act allows taxpayers to adjust losses from one source of income against another source of income within the same head. This is called intra-head adjustment and helps in reducing taxable income.
Key Rules for Set-Off of Losses Under the Same Head:
✅ Business Loss: Loss from one business can be set off against income from another business. ✅ House Property Loss: Loss from one property can be set off against income from another property. ✅ Capital Gains:
Short-term capital loss (STCL) can be set off against short-term or long-term capital gains.
Long-term capital loss (LTCL) can be set off only against long-term capital gains.
🚫 Exceptions:
Speculation loss can be set off only against speculation income.
Loss from owning race horses can be set off only against income from race horses.
The Income Tax Act, 1961, allows taxpayers to adjust losses against income from other sources to reduce taxable income. The process is divided into two steps: 1. Intra-Head Adjustment (Same Head of Income) – Section 70 Losses under one source of income can be set off against income from another sourRead more
The Income Tax Act, 1961, allows taxpayers to adjust losses against income from other sources to reduce taxable income. The process is divided into two steps:
1. Intra-Head Adjustment (Same Head of Income) – Section 70
Losses under one source of income can be set off against income from another source under the same head of income.
✅ Examples:
Loss from business A can be set off against profit from business B.
Loss from one house property can be set off against income from another house property.
Short-term capital loss (STCL) can be set off against short-term or long-term capital gains.
🚫 Exceptions:
Speculation loss can be set off only against speculation income.
Long-term capital loss (LTCL) can be set off only against long-term capital gains.
Loss from owning race horses can be set off only against income from race horses.
2. Inter-Head Adjustment (Different Heads of Income) – Section 71
If a loss remains after intra-head adjustment, it can be set off against income from another head in the same financial year.
✅ Examples:
Business loss can be set off against salary, house property, or capital gains.
House property loss can be set off against salary, business, or other income (up to ₹2 lakh per year).
🚫 Restrictions:
Speculation losses cannot be set off against any other head of income.
Capital losses can only be set off against capital gains.
Loss from race horses cannot be set off against other incomes.
Business losses cannot be set off against salary income.
3. Carry Forward of Losses (If Not Fully Adjusted)
If a loss cannot be fully set off in the current year, it can be carried forward for set periods and adjusted in future years as per income tax provisions.
📌 Important Rules: ✅ The income tax return must be filed on time to carry forward losses. ✅ Losses can be set off only as per rules defined in the Act.
This helps taxpayers optimize tax liability and minimize tax burden legally.
Under the Income Tax Act, 1961, different types of losses can be carried forward for set periods and adjusted against specific incomes. Here’s a summary: 1. Business Losses Carried forward for: 8 assessment years Set-off allowed against: Only business income (not salary, capital gains, or house propRead more
Under the Income Tax Act, 1961, different types of losses can be carried forward for set periods and adjusted against specific incomes. Here’s a summary:
1. Business Losses
Carried forward for:8 assessment years
Set-off allowed against: Only business income (not salary, capital gains, or house property income).
Condition: The income tax return must be filed on or before the due date under Section 139(1).
2. Speculation Losses (from intra-day trading or derivatives)
Carried forward for:4 assessment years
Set-off allowed against: Only speculation profits (not any other income).
3. Capital Losses (from the sale of assets, shares, or securities)
Carried forward for:8 assessment years
Set-off allowed against:
Short-Term Capital Loss (STCL): Can be adjusted against both short-term and long-term capital gains.
Long-Term Capital Loss (LTCL): Can be adjusted only against long-term capital gains.
4. Losses from House Property
Carried forward for:8 assessment years
Set-off allowed against:Income from house property.
5. Loss from Owning and Maintaining Race Horses
Carried forward for:4 assessment years
Set-off allowed against: Only income from race horses.
6. Unabsorbed Depreciation
Carried forward for:Indefinite years
Set-off allowed against: Any income except salary.
The Income Tax Act allows different types of losses to be carried forward for a specified number of years. Here's a breakdown: 1. Business Losses Carried forward for: 8 assessment years Set-off allowed against: Only business income (cannot be set off against other heads of income). Condition: The reRead more
The Income Tax Act allows different types of losses to be carried forward for a specified number of years. Here’s a breakdown:
1. Business Losses
Carried forward for:8 assessment years
Set-off allowed against: Only business income (cannot be set off against other heads of income).
Condition: The return of income must be filed within the due date under Section 139(1).
2. Speculation Losses (from intra-day trading or derivatives)
Carried forward for:4 assessment years
Set-off allowed against: Only speculation profits.
3. Capital Losses (from the sale of assets, securities, or shares)
Carried forward for:8 assessment years
Set-off allowed against:
Short-Term Capital Loss (STCL): Can be set off against both short-term and long-term capital gains.
Long-Term Capital Loss (LTCL): Can be set off only against long-term capital gains.
4. Losses from House Property
Carried forward for:8 assessment years
Set-off allowed against:Income from house property in future years.
5. Unabsorbed Depreciation
Carried forward for:Indefinite years
Set-off allowed against: Any head of income except salary.
Under the Income Tax Act of India, losses incurred from the sale of securities and shares can indeed be carried forward to offset future capital gains, subject to specific conditions: 1. Classification of Capital Losses: Short-Term Capital Loss (STCL): Occurs when securities are sold within 12 monthRead more
Under the Income Tax Act of India, losses incurred from the sale of securities and shares can indeed be carried forward to offset future capital gains, subject to specific conditions:
1. Classification of Capital Losses:
Short-Term Capital Loss (STCL): Occurs when securities are sold within 12 months of acquisition. Such losses can be set off against both short-term and long-term capital gains. If not fully adjusted in the same financial year, they can be carried forward for up to 8 assessment years.
Long-Term Capital Loss (LTCL): Arises when securities are sold after 12 months of holding. These losses can only be set off against long-term capital gains. Unadjusted LTCL can also be carried forward for up to 8 assessment years.
2. Conditions for Carry Forward:
Timely Filing of Income Tax Return: To carry forward capital losses, it’s mandatory to file your income tax return within the due date specified under Section 139(1) of the Income Tax Act. Failure to do so disqualifies the taxpayer from carrying forward the losses.
3. Set-Off Provisions:
Short-Term Capital Loss: Can be set off against both short-term and long-term capital gains.
Long-Term Capital Loss: Can only be set off against long-term capital gains.
4. Carry Forward Duration:
Both STCL and LTCL can be carried forward for a maximum of 8 assessment years immediately succeeding the year in which the loss was incurred.
I am receiving a monthly fix amount from a trust created by my father, is it chargeable to tax under the income tax act?
Yes, the monthly fixed amount you receive from a trust established by your father is subject to taxation under the Income Tax Act, 1961. The tax implications depend on the nature of the trust and its income distribution. Here's a breakdown: 1. Revocable vs. Irrevocable Trusts Revocable Trust: If youRead more
Yes, the monthly fixed amount you receive from a trust established by your father is subject to taxation under the Income Tax Act, 1961. The tax implications depend on the nature of the trust and its income distribution. Here’s a breakdown:
1. Revocable vs. Irrevocable Trusts
Revocable Trust: If your father retains control over the trust, making it revocable, the income generated is taxable in his hands.
Irrevocable Trust: If the trust is irrevocable, meaning your father has relinquished control, the taxation depends on the type of trust:
Specific (Determinate) Trust: If the trust deed specifies that you are entitled to a fixed monthly amount, this income is taxable in your hands as “Income from Other Sources.”
Discretionary Trust: If the trustee has discretion over income distribution, the trust is taxed at the maximum marginal rate, and the income is taxed in your hands only upon distribution.
2. Tax Rates and Deductions
Tax Rate: The income you receive is taxed according to your applicable income tax slab rate.
Deductions: You may be eligible to claim deductions under Sections 80C to 80U, depending on your specific circumstances.
3. Documentation
It’s essential to maintain proper documentation, including the trust deed and any income statements, to accurately report this income on your tax return.
Given the complexities involved in trust taxation, it’s advisable to consult a tax professional to ensure compliance with all applicable tax laws and to optimize your tax planning.
See lessWhen salary/fees received by my wife is clubbed to my hands?
The salary or professional fees earned by your wife may or may not be clubbed with your income, depending on the nature of employment and the relationship between your income and her earnings. Let’s break it down: 1️⃣ When Wife’s Income is NOT Clubbed? ✅ ✔ Genuine Salary from an Unrelated Employer:Read more
The salary or professional fees earned by your wife may or may not be clubbed with your income, depending on the nature of employment and the relationship between your income and her earnings. Let’s break it down:
1️⃣ When Wife’s Income is NOT Clubbed? ✅
✔ Genuine Salary from an Unrelated Employer:
✔ Professional Fees from Independent Work:
✔ When She Has a Separate Business:
2️⃣ When Wife’s Income is Clubbed? ❌
📌 Salary from a Concern in Which You Have Substantial Interest (Section 64(1)(ii))
📌 Example:
3️⃣ What About Partnership Firm Income?
Key Takeaways:
✔ Independent salary/professional fees = Taxed in her hands ✅
See less✔ Salary from a business where you hold 20%+ = Clubbed with your income ❌
✔ If she is qualified for the job, her income is not clubbed ✅
✔ Salary from an unrelated company = Taxed separately ✅
I have transferred a commercial property to my wife and she has rented it out, how it is charged to tax under income tax act?
If you have transferred a commercial property to your wife without any consideration (i.e., as a gift), the rental income received by her will not be taxed in her hands but will be clubbed with your income under Section 64(1)(iv) of the Income Tax Act, 1961. How the Rental Income is Taxed? 🔹 ClubbinRead more
If you have transferred a commercial property to your wife without any consideration (i.e., as a gift), the rental income received by her will not be taxed in her hands but will be clubbed with your income under Section 64(1)(iv) of the Income Tax Act, 1961.
How the Rental Income is Taxed?
🔹 Clubbing of Income: Since the transfer was made without adequate consideration, the rental income will be added to your taxable income and taxed as “Income from House Property” in your hands.
🔹 Standard Deduction: Under Section 24(a), you can claim a 30% deduction on the rental income as a standard deduction.
🔹 Interest on Loan Deduction: If there is an outstanding home loan on the property, you can claim a deduction under Section 24(b) for the interest paid on the loan.
See lessMy sone is earning money from singing on stage, is it charged to tax under income tax act?
es, your son's earnings from singing on stage are taxable under the Income Tax Act, 1961. The classification of this income depends on the nature and frequency of his performances. Here's how it is taxed: 1️⃣ Professional Income (Section 28 & 44ADA - Profits & Gains of Business or ProfessionRead more
es, your son’s earnings from singing on stage are taxable under the Income Tax Act, 1961. The classification of this income depends on the nature and frequency of his performances. Here’s how it is taxed:
1️⃣ Professional Income (Section 28 & 44ADA – Profits & Gains of Business or Profession)
✅ Example:
If he earns ₹10 lakh in a year from singing, under 44ADA, only ₹5 lakh will be taxable.
2️⃣ Income from Other Sources (Section 56)
3️⃣ Clubbing of Income (If Minor) – Section 64(1A)
4️⃣ Tax Deducted at Source (TDS) & GST Applicability
- If event organizers or companies pay him, TDS may be deducted at 10% (under Section 194J – Professional Fees).
- If his earnings exceed ₹20 lakh per year (₹10 lakh for NE states), he may also need to register for GST and charge 18% GST on his professional services.
See lessCan loss also be clubbed under income tax act?
Yes, losses can also be clubbed under the Income Tax Act, 1961, in cases where income is required to be clubbed as per Section 64. This typically happens in situations where income from one person (such as a spouse, minor child, or specified relative) is added to another person's income. When Can LoRead more
Yes, losses can also be clubbed under the Income Tax Act, 1961, in cases where income is required to be clubbed as per Section 64. This typically happens in situations where income from one person (such as a spouse, minor child, or specified relative) is added to another person’s income.
When Can Losses Be Clubbed?
1️⃣ Income from Transferred Assets (Section 64)
2️⃣ Minor Child’s Income (Section 64(1A))
3️⃣ Partnership Firm or HUF Cases
Example Scenario
🔹 A father gifts ₹5 lakh to his minor child, who invests it in stocks and incurs a loss of ₹50,000. Since the child’s income is clubbed with the parent’s income, the loss is also clubbed, and the parent can use it for set-off.
🔹 A husband transfers a property to his wife without consideration. If the wife incurs a rental loss, the husband must club that loss with his income.
See lessWhat is set off of losses under same head of Income under income tax act?
The Income Tax Act allows taxpayers to adjust losses from one source of income against another source of income within the same head. This is called intra-head adjustment and helps in reducing taxable income. Key Rules for Set-Off of Losses Under the Same Head: ✅ Business Loss: Loss from one businesRead more
The Income Tax Act allows taxpayers to adjust losses from one source of income against another source of income within the same head. This is called intra-head adjustment and helps in reducing taxable income.
Key Rules for Set-Off of Losses Under the Same Head:
✅ Business Loss: Loss from one business can be set off against income from another business.
✅ House Property Loss: Loss from one property can be set off against income from another property.
✅ Capital Gains:
🚫 Exceptions:
See less
How to set off losses of one head from income of other heads under income tax act?
The Income Tax Act, 1961, allows taxpayers to adjust losses against income from other sources to reduce taxable income. The process is divided into two steps: 1. Intra-Head Adjustment (Same Head of Income) – Section 70 Losses under one source of income can be set off against income from another sourRead more
The Income Tax Act, 1961, allows taxpayers to adjust losses against income from other sources to reduce taxable income. The process is divided into two steps:
1. Intra-Head Adjustment (Same Head of Income) – Section 70
Losses under one source of income can be set off against income from another source under the same head of income.
✅ Examples:
🚫 Exceptions:
2. Inter-Head Adjustment (Different Heads of Income) – Section 71
If a loss remains after intra-head adjustment, it can be set off against income from another head in the same financial year.
✅ Examples:
🚫 Restrictions:
3. Carry Forward of Losses (If Not Fully Adjusted)
If a loss cannot be fully set off in the current year, it can be carried forward for set periods and adjusted in future years as per income tax provisions.
📌 Important Rules:
✅ The income tax return must be filed on time to carry forward losses.
✅ Losses can be set off only as per rules defined in the Act.
This helps taxpayers optimize tax liability and minimize tax burden legally.
See lessWhich loss can be carry forward under income tax act?
Under the Income Tax Act, 1961, different types of losses can be carried forward for set periods and adjusted against specific incomes. Here’s a summary: 1. Business Losses Carried forward for: 8 assessment years Set-off allowed against: Only business income (not salary, capital gains, or house propRead more
Under the Income Tax Act, 1961, different types of losses can be carried forward for set periods and adjusted against specific incomes. Here’s a summary:
1. Business Losses
2. Speculation Losses (from intra-day trading or derivatives)
3. Capital Losses (from the sale of assets, shares, or securities)
4. Losses from House Property
5. Loss from Owning and Maintaining Race Horses
6. Unabsorbed Depreciation
- Carried forward for: Indefinite years
- Set-off allowed against: Any income except salary.
See lessFor how many years losses can be carry forward under the income tax act?
The Income Tax Act allows different types of losses to be carried forward for a specified number of years. Here's a breakdown: 1. Business Losses Carried forward for: 8 assessment years Set-off allowed against: Only business income (cannot be set off against other heads of income). Condition: The reRead more
The Income Tax Act allows different types of losses to be carried forward for a specified number of years. Here’s a breakdown:
1. Business Losses
2. Speculation Losses (from intra-day trading or derivatives)
3. Capital Losses (from the sale of assets, securities, or shares)
4. Losses from House Property
5. Unabsorbed Depreciation
- Carried forward for: Indefinite years
- Set-off allowed against: Any head of income except salary.
See lessCan we carry forward the loss on sale of securities and share?
Under the Income Tax Act of India, losses incurred from the sale of securities and shares can indeed be carried forward to offset future capital gains, subject to specific conditions: 1. Classification of Capital Losses: Short-Term Capital Loss (STCL): Occurs when securities are sold within 12 monthRead more
Under the Income Tax Act of India, losses incurred from the sale of securities and shares can indeed be carried forward to offset future capital gains, subject to specific conditions:
1. Classification of Capital Losses:
Short-Term Capital Loss (STCL): Occurs when securities are sold within 12 months of acquisition. Such losses can be set off against both short-term and long-term capital gains. If not fully adjusted in the same financial year, they can be carried forward for up to 8 assessment years.
Long-Term Capital Loss (LTCL): Arises when securities are sold after 12 months of holding. These losses can only be set off against long-term capital gains. Unadjusted LTCL can also be carried forward for up to 8 assessment years.
2. Conditions for Carry Forward:
3. Set-Off Provisions:
Short-Term Capital Loss: Can be set off against both short-term and long-term capital gains.
Long-Term Capital Loss: Can only be set off against long-term capital gains.
4. Carry Forward Duration:
- Both STCL and LTCL can be carried forward for a maximum of 8 assessment years immediately succeeding the year in which the loss was incurred.
See less