After retirement, I have started an engineering consultancy firm and earn professional fees. How can I combine such fees with income from investments and pension to calculate the tax?—Deepak Kapoor
Professional fees earned from an engineering consultancy would be taxable as profits and gains from business or profession, after allowing eligible business expenses or, where applicable, under the presumptive taxation provisions. Pension received after retirement is taxable under the salary head, while interest, dividends, and similar investment income fall under income from other sources.
These incomes are then added in determining the total income and the applicable tax liability. The choice between the old and new tax regimes should be evaluated as the availability of deductions and exemptions differs between the two regimes. Further, you will need to report your income in ITR-3 or ITR-4 where professional income is declared under the presumptive taxation scheme.
Is gratuity taxable for private sector employees? Can I request my employer to pay the amount in two years to reduce the tax burden?—Arvind Kumar
The tax exemption depends on whether the employee is covered by the Payment of Gratuity Act, 1972. For employees covered under the Act, the exemption is limited to the least of: actual gratuity received; Rs 20 lakh, and last salary (basic + DA) x number of years of employment x 15/26. In case of employees not covered under the Act, the exemption is limited to the least of: actual gratuity received; Rs 20 lakh, and last 10 months’ average salary (basic + DA) x number of years of employment x 1/2.
Any gratuity received in excess of the eligible exemption is taxable as salary in the year in which it becomes due. Therefore, asking the employer to split the gratuity into two instalments over two financial years will not, by itself, allow the employee to claim the Rs 20 lakh exemption twice. The Rs 20 lakh ceiling is not an annual exemption; it is an overall limit.
I am a student and earn some money by writing blogs. Do I have to file income tax returns?—Mohit Verma
Even as a student, if you have earned income, whether in India or in foreign currency, you are required to file an Income Tax Return (ITR). If your total income exceeds the basic exemption limit (Rs 2.5 lakh under the old regime or Rs 3 lakh under the new regime), filing is mandatory. Even if your income is below the limit, filing an ITR is advisable as it helps maintain proper financial records and may be required for future visa or loan purposes.
The writer is senior partner, Nangia & Co LLP. Send your queries to fepersonalfinance@expressindia.com
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Investors should assess their financial goals, risk appetite and consult a qualified financial advisor before making investment decisions.
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This article was first uploaded on October thirty, twenty twenty-six, at fifty-six minutes past eight in the night.
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