Can I claim tax deduction on expenses incurred for engineering consultancy work if I file presumptive tax?—Rajesh Awasti
No, separate deductions for actual business expenses cannot be claimed if you opt for presumptive taxation. Under Section 58 of theIncome-tax Act, 2025, eligible professionals, including those carrying on qualifying engineering consultancy activities, may declare income at the prescribed presumptive rate of 50% of gross receipts, subject to the applicable eligibility and receipt thresholds i.e. Rs 50 lakh, increased to Rs 75 lakh where cash receipts do not exceed 5% of total gross receipts.
The presumptive taxation scheme simplifies tax compliance by relieving eligible taxpayers from the requirement to maintain detailed books of account and, where the prescribed conditions are met, undergo a tax audit. The prescribed rate takes into account business expenses and depreciation, which cannot ordinarily be claimed separately. If your actual expenses exceed 50% of gross receipts and you wish to claim deductions based on actual expenditure, you may consider computing income under the regular provisions, subject to the applicable requirements for maintaining books of account and tax audit.
l I have received Rs 20 lakh from the sale of a unit-linked insurance plan. Do I have to pay any capital gains tax on this amount?—Dinesh Kumar
The taxability of proceeds from a unit-linked insurance plan (Ulip) depends entirely on the policy issuance date, annual premium and applicable exemption conditions under the Income-tax Act, 2025. Proceeds from Ulips issued before February 1, 2021, are exempt under the applicable provisions of the Act, given the annual premium does not exceed 10% of the sum assured. For Ulips issued on or after February 1, 2021, the exemption applies only if the annual premium paid is less than 10% of the capital sum assured (or 15% in specified cases involving disability or ailments) and the aggregate annual premium paid does not exceed Rs 2.5 lakh for eligible policies.
Where the exemption conditions are not satisfied, the gains shall be taxable under the head ‘capital gains’ and are classified as long-term capital gains under section 198 where the period of holding exceeds 12 months and taxed at the rate of 12.5% (plus applicable surcharge and cess), or as short-term capital gains under section 196 where such condition is not met and taxed at the rate of 20% (plus applicable surcharge and cess). The tax liability cannot be determined solely based on the receipt of Rs 20 lakh and would require an examination of the policy terms and the total premiums paid.
The writer is managing partner, AKM Global. Send your queries to fepersonal finance@expressindia.com
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This article was first uploaded on October twenty-four, twenty twenty-six, at twenty-four minutes past twelve in the am.
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