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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    Yes, under the Indian Income Tax Act, gifts received from specified relatives are exempt from tax, regardless of the amount. This exemption is outlined in Section 56(2)(x) of the Income Tax Act, 1961. The term 'relative' includes: Spouse of the individual​ Brother or sister of the individual​ BrotheRead more

    Yes, under the Indian Income Tax Act, gifts received from specified relatives are exempt from tax, regardless of the amount. This exemption is outlined in Section 56(2)(x) of the Income Tax Act, 1961.

    The term ‘relative’ includes:

    1. Spouse of the individual​

    2. Brother or sister of the individual​

    3. Brother or sister of the spouse of the individual​

    4. Brother or sister of either of the parents of the individual​

    5. Any lineal ascendant or descendant of the individual​

    6. Any lineal ascendant or descendant of the spouse of the individual​

    7. Spouse of the persons referred to in points 2 to 6

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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    In India, monetary gifts received by an individual or a Hindu Undivided Family (HUF) are generally taxable under Section 56(2)(x) of the Income Tax Act, 1961. However, there are certain exceptions where such gifts are not taxable. Let’s go through these exemptions in detail. Exemptions from Tax on MRead more

    In India, monetary gifts received by an individual or a Hindu Undivided Family (HUF) are generally taxable under Section 56(2)(x) of the Income Tax Act, 1961. However, there are certain exceptions where such gifts are not taxable. Let’s go through these exemptions in detail.

    Exemptions from Tax on Monetary Gifts

    Monetary gifts received by an individual or HUF are not taxable in the following cases:

    1. Gifts from Specified Relatives (Fully Exempt)

    As per Section 56(2)(x) of the Income Tax Act, gifts received from specified relatives are completely exempt from tax, regardless of the amount. The list of relatives includes:

    • For an Individual:

      • Spouse

      • Brother or Sister (of the individual or spouse)

      • Brother or Sister of either of the parents

      • Any lineal ascendant or descendant (of the individual or spouse)

      • Spouse of the above-mentioned relatives

    • For an HUF:

      • Any member of the HUF (gifts received from members are not taxable)

    2. Gifts Received on Marriage (Fully Exempt)

    Under Section 56(2)(x), any amount received as a gift on the occasion of marriage is completely exempt from tax. There is no upper limit for this exemption.

    3. Gifts Under a Will or by Inheritance (Fully Exempt)

    Any money received:

    • Under a will

    • By way of inheritance

    • In contemplation of the death of the payer

    is not taxable under Section 56(2)(x).

    4. Gifts from a Registered Trust or Institution (Exempt under Certain Conditions)

    If an individual or HUF receives a gift from:

    • A registered charitable or religious trust (covered under Section 12A or 12AA of the Income Tax Act)

    • A trust created solely for the benefit of relatives of the donor

    Then such gifts are not taxable, subject to conditions.

    5. Gifts from Local Authorities

    Any amount received from a local authority (as defined under Section 10(20) of the Income Tax Act) is fully exempt.

    6. Gifts from Recognized Funds and Institutions

    Money received from:

    • Educational institutions

    • Medical institutions

    • Recognized funds such as the Employees’ Provident Fund (EPF), Public Provident Fund (PPF), and others

    is not considered taxable income.

    7. Gifts Received Due to Sudden Death of a Relative (Ex-Gratia Payment)

    If an individual receives an ex-gratia amount due to the death of a close relative, such an amount is not considered taxable income under the principles of personal bereavement.

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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    Under Section 56(2)(x) of the Income Tax Act, 1961, monetary gifts received by an individual or Hindu Undivided Family (HUF) are taxable if they exceed a certain threshold and do not fall under specific exemptions. 1. Taxable Amount of Gifts If an individual or HUF receives monetary gifts exceedingRead more

    Under Section 56(2)(x) of the Income Tax Act, 1961, monetary gifts received by an individual or Hindu Undivided Family (HUF) are taxable if they exceed a certain threshold and do not fall under specific exemptions.

    1. Taxable Amount of Gifts

    • If an individual or HUF receives monetary gifts exceeding ₹50,000 in a financial year from non-relatives, the entire amount becomes taxable under “Income from Other Sources”.

    • If the total value of gifts received in a financial year is ₹50,000 or less, they are not taxable.

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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Manish Kumar Gupta Enlightened

    Section 44AE of the Income Tax Act, 1961, provides a presumptive taxation scheme for owners of goods carriages. Under this scheme, the taxable income is calculated on a deemed basis, instead of actual income and expenses. 2. Applicability of Section 44AE The scheme applies to: Individuals, HUFs, FirRead more

    Section 44AE of the Income Tax Act, 1961, provides a presumptive taxation scheme for owners of goods carriages. Under this scheme, the taxable income is calculated on a deemed basis, instead of actual income and expenses.

    2. Applicability of Section 44AE

    The scheme applies to:

    • Individuals, HUFs, Firms (excluding LLPs), and Companies engaged in the business of plying, hiring, or leasing goods carriages.

    • Businesses owning not more than 10 goods vehicles at any time during the financial year.

    3. Presumptive Income Calculation (Deemed Income)

    Under Section 44AE(2):

    • For Heavy Goods Vehicles (HGV) (Gross Vehicle Weight >12,000 kg) → ₹1,000 per ton per month or part thereof.

    • For Other Vehicles → ₹7,500 per month per vehicle.

    • 4. Advance Tax Liability Under Section 44AE

      Unlike regular businesses, persons opting for Section 44AE are liable to pay advance tax in a single installment by 15th March of the financial year.

      Legal Provisions

      • As per Section 211(1)(b) read with Section 44AE, taxpayers under presumptive taxation schemes (including Section 44AE) are not required to pay advance tax in four installments.

      • Instead, the entire advance tax liability must be paid on or before 15th March of the financial year.

      • If tax is not paid by 15th March, it can still be paid by 31st March, but delay may attract interest under Sections 234B and 234C.

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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Manish Kumar Gupta Enlightened

    Section 44AA(2) requires certain taxpayers to maintain books of account. However, as per Section 44AE(4): 🔹 A person opting for Section 44AE is NOT required to maintain books of account under Section 44AA if they declare income as per the presumptive scheme. ✅ Example:A transporter owning 6 trucks oRead more

    Section 44AA(2) requires certain taxpayers to maintain books of account. However, as per Section 44AE(4):

    🔹 A person opting for Section 44AE is NOT required to maintain books of account under Section 44AA if they declare income as per the presumptive scheme.

    ✅ Example:
    A transporter owning 6 trucks opts for Section 44AE and declares income as per the prescribed method. In this case, he is not required to maintain books of account.

    Exception – When Books of Accounts are Required

    A person opting out of Section 44AE and declaring a lower income than the presumptive amount must:

    1. Maintain books of account as per Section 44AA.

    2. Get the books audited under Section 44AB, if total income exceeds the basic exemption limit.

    ❌ Example:
    A transporter has 8 trucks but declares an income less than ₹7,500 per truck per month (for light vehicles). Since the income is lower than the presumptive scheme, he must maintain books of account and get an audit done if his total income exceeds ₹2,50,000 (or the applicable exemption limit).

    Conclusion

    ✅ Books of account are NOT required if income is declared as per Section 44AE.
    ❌ Books of account are required if a lower income than prescribed is declared.

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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Manish Kumar Gupta Enlightened

    1. Understanding Presumptive Taxation Under Section 44AE Section 44AE provides a simplified method of taxation for individuals, HUFs, firms (excluding LLPs), and companies engaged in the business of plying, hiring, or leasing goods carriages, provided they own not more than 10 vehicles at any time dRead more

    1. Understanding Presumptive Taxation Under Section 44AE

    Section 44AE provides a simplified method of taxation for individuals, HUFs, firms (excluding LLPs), and companies engaged in the business of plying, hiring, or leasing goods carriages, provided they own not more than 10 vehicles at any time during the financial year.

    Under this scheme, the taxable income is deemed and is calculated as follows:

    • For Heavy Goods Vehicles (HGV) (More than 12,000 kg Gross Vehicle Weight)

      • ₹1,000 per ton per month or part thereof

    • For Other Vehicles (Light/Medium Goods Vehicles)

      • ₹7,500 per vehicle per month or part thereof

    2. Can Deductions Be Claimed Under Section 44AE?

    🚫 No, deductions under Sections 30 to 38, including depreciation, cannot be separately claimed.

    As per Section 44AE(3):

    “Any deduction under Sections 30 to 38 shall be deemed to have been already given effect to and no further deduction shall be allowed.”

    Thus, no separate deductions for expenses like fuel, driver salary, repair & maintenance, insurance, or depreciation are allowed since these are assumed to be covered in the presumptive income.

    ✅ However, the following deductions are allowed:

    (a) Salary and Interest to Partners (For Partnership Firms)

    • If the assessee is a partnership firm, it can claim deduction for remuneration and interest paid to partners as per Section 40(b), subject to limits.

    (b) Deductions Under Chapter VI-A (E.g., Section 80C, 80D, 80G, etc.)

    Even though business expenses are not allowed, the taxpayer can claim deductions under Chapter VI-A against gross total income. These include:

    • Section 80C – LIC, PPF, ELSS, etc.

    • Section 80D – Health insurance premiums

    • Section 80G – Donations to eligible charities

    • Section 80U – Deduction for disabled individuals

    3. Exception – When Deductions Can Be Claimed

    If the taxpayer declares lower income than prescribed under Section 44AE, he must:

    1. Maintain books of account as per Section 44AA

    2. Get them audited under Section 44AB if total income exceeds the basic exemption limit
      👉 In such cases, actual expenses and deductions can be claimed.

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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Manish Kumar Gupta Enlightened

    A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE.✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE.❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.

    A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE.
    ✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE.
    ❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.

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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Manish Kumar Gupta Enlightened

    1. Who Can Opt for Section 44AE? As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to: ✅ Eligible Assessees: Individuals Hindu Undivided Families (HUFs) Partnership firms (excluding LLPs) Companies ✅ Eligible Business: The assessee must be engaged in the busRead more

    1. Who Can Opt for Section 44AE?

    As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to:

    ✅ Eligible Assessees:

    • Individuals

    • Hindu Undivided Families (HUFs)

    • Partnership firms (excluding LLPs)

    • Companies

    ✅ Eligible Business:

    • The assessee must be engaged in the business of plying, hiring, or leasing goods carriages.

    ✅ Vehicle Ownership Limit:

    • The taxpayer must not own more than 10 goods vehicles at any time during the previous year.

    2. Who is NOT Eligible for Section 44AE?

    🚫 The following categories are NOT eligible for Section 44AE:

    1. Persons owning more than 10 goods vehicles at any time during the financial year.

    2. Limited Liability Partnerships (LLPs) – Since Section 44AE applies only to individuals, HUFs, firms (excluding LLPs), and companies, LLPs cannot opt for this scheme.

    3. Businesses other than plying, hiring, or leasing goods carriages.

    4. Taxpayers who wish to declare lower income than the prescribed presumptive income – They must maintain books of account under Section 44AA and get an audit under Section 44AB, if applicable.

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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Manish Kumar Gupta Enlightened

    "If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to:(a) Maintain books of account as per Section 44AA, and(b) Get his accounts audited under Section 44AB."

    “If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to:
    (a) Maintain books of account as per Section 44AA, and
    (b) Get his accounts audited under Section 44AB.”

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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Manish Kumar Gupta Enlightened

    Requirement to Maintain Books of Account & Audit 📌 Case 1: If Income Declared is 50% or More✅ No requirement to maintain books of account under Section 44AA.✅ No requirement for tax audit under Section 44AB. 📌 Case 2: If Income Declared is Less Than 50%❌ Books of account must be maintained as peRead more

    Requirement to Maintain Books of Account & Audit

    📌 Case 1: If Income Declared is 50% or More
    ✅ No requirement to maintain books of account under Section 44AA.
    ✅ No requirement for tax audit under Section 44AB.

    📌 Case 2: If Income Declared is Less Than 50%
    ❌ Books of account must be maintained as per Section 44AA.
    ❌ Audit under Section 44AB is required if total income exceeds the basic exemption limit (₹2.5 lakh/₹3 lakh/₹5 lakh as per age category).

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