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I understand lawyers being professional can avail "upto 50%" standard deductions as expenses without the need to have their accounts audited.
I just wanted to know if normally people do claim the entire 50% deduction or do you actually sit and calculate how much expenses have been made and then enter the exact amount? Alternatively, if someone is claiming less than 50% deduction, can be it a ballpark figure like 30%?
Context: A0. I'm saving 80-90% retainer.
I believe this is an important part most of the lawyers here are overlooking
Hope this helps and may be from next year expenses can be planned accordingly.
Even if someone asks you why do you have more money in your bank account - you can always say you had availed certain services/bought certain things on credit/loan and haven't paid them off.
Taking your example further - let's say I have 10 lakhs of 'cash in hand' available apart from the 20 lakhs that I have earned during the year.
Now I can say that even though I didn't make payments from my bank a/c and my bank a/c shows 20L balance - I can still say that I have made cash payments of 10L(since I had cash in hand with me) and hence my bank a/c balance is still 20L. Although I may be required to keep receipts as proof for these cash payments but Idk if the tax department will really be concerned over here?
Anybody has any thoughts on this?
1. There is no need for you to keep books of accounts. If your bank account shows deduction of 50% or more (towards any sort of expenses other than investment or loan to another person), the same will be available to you as deduction; and
2. The department cannot and will not claim that the deduction from the bank account is not legally deductible from the income for computing taxable income
Please also note that amount withdrawn from the bank account to undertake expenses in cash will also be counted towards fulfilling the above 50% criteria