After retiring from a public sector bank, I transitioned to teaching at various MBA institutes in Mumbai and also work as a consultant with banks and related organisations. In addition to my professional income, I receive a pension from my former employer. I have been filing my income-tax returns in the standard manner. Some friends have now suggested that I should, instead, file my returns under Section 44ADA of the Income-tax Act to potentially reduce my tax liability. Please advise.
Amit Maheshwari Tax Partner, AKM Global: Given your professional engagements, you could opt for the presumptive taxation scheme under Section 44ADA of the Income-tax Act 1961. This scheme applies to specified professionals, such as those in law, medicine and consultancy, with gross receipts of up to `75 lakh per year (with cash receipts limited to 5%). Under this scheme, you can declare 50% of your gross receipts as business income, simplifying tax compliance by eliminating the need to maintain detailed accounts. If your receipts are below `75 lakh, you can file your return using ITR Form 4 (Sugam). However, no additional deductions for business expenses are allowed. Also, your pension will be considered salary income and should be reported under the head ‘Income from salary’ in the ITR.
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