We want LI to be one of the friendliest places on the internet, where lawyers and law students help each other with their career related queries and occasionally discuss other stuff that might affect their lives too. In other words:
1. Be kind, respectful and helpful to each other.
2. Be bona fide, truthful, genuine and curious.
3. Assume the best intention of others.
Therefore, in using the site, you must agree to do your best to uphold these community guidelines.
Note that what you find here is written and moderated by anonymous people on the internet.
Therefore everything you read here is very likely unverified, rumour, speculation and/or downright false.
In continuing to read anything here, you must therefore agree not to take anything you read here as factual and that you will exercise due caution, diligence and common sense before acting on any information you may come across here.
You also agree to report any inaccurate or malicious comments with the buttons. Moderators take action within 24 hours, as required and appropriate under law.
Our full terms and conditions apply too.
Do you solemnly agree to all of the above?
1. Can I claim other exemptions apart from 44ADA like 80C or 80GG (rent) etc.
2. Does the fact that 50% of my income is deemed "expense" mean that it should reflect in my bank account (for example if I earn 1lakh per month, does it mean that my bank account should reflect that I do not have more than 50k since I am claiming it as an expense)
I had also referred a CA regarding this and he gave me an example of the tax breakup which goes like:
Assuming the package is of 16 LPA. So by 44ADA, 50% is deducted and the taxable income is 8L. On this 8L, no other deductions can be claimed so by applying new regime, it comes to 36,400 (0-3L: no tax, 3-6L: 5% i.e. 15,000 and 6-8L: 10% i.e. 20,000 plus cess 4%)
Is this how the tax is paid or is there a different practice which goes around?
There is also another thread on LI about this but I didn't quite get it so looking for answers from experienced people with simplified version.
Yes. You are supposed to claim expenses only to the extent you have actually made such expenses. Thus, if you earned 16L in a year but spent only 3L, you cannot claim that you have spent 8L. Your bank statements and declared incomes would soon start varying drastically otherwise.
That's the understanding I (and several others) have on this. The deeming provision is only to the extent that your expenses will be deemed to be towards your profession - not that you will deemed to have made such expenses. Thus, the only practical aspect is you do not have to keep any invoices, bills etc. of your expenses.
I have seen many CAs disagree on this, however. A lot of people are still filing their returns claiming the full 50%, even though their accounts disagree. Most of the claims have been processed - but that does not mean it's legally correct and cannot become an issue for you.
Previous threads:
https://www.legallyindia.com/convos/topic/207569-50-standard-tax-deduction-for-professionals-please-help
https://www.legallyindia.com/convos/topic/186351-presumptive-taxation-of-lawyers
#2 - yes, ideally, spend/withdraw 50% from your bank a/c.
If 80GG & 80C are applicable in your case, then you should be able to bring down your taxable income to 5.9 lacs and tax liability under old regime should be around ~32k.
Don't blindly trust your CA, ask around with other CAs and tax lawyers