I am a freelance consultant and write content for a couple of financial websites. I made ₹21 lakh in FY24 from my content work. Additionally, I received rent from letting out my house, to the tune of ₹3.5 lakh per annum. Can I use section 44ADA and declare 50 per cent of my content income? Also, am I allowed to take 30 per cent deduction on my rent? If I take these deductions, can I still opt for the new tax regime while filing returns?

Manjunath

Here are the factors to be taken note of, with regard to your query.

Presumptive taxation

·        Section 44ADA of the Act governs the provision for presumption taxation of income in case of specified professionals (section 44AA) if the gross receipts are less than ₹75 lakh. Accordingly, a sum equal to 50 per cent of the total gross receipts shall be deemed to be profits and gains of such profession.

·        The Section 44AA(1) of the Act prescribes the list of professionals qualifying for presumptive taxation under section 44ADA of the Act. Accordingly, the professionals engaged in the following occupations qualify:

o   Legal

o   Medical

o   Engineering

o   Architectural profession

o   Accountancy

o   Technical consultancy

o   Interior decoration

o   Any other notified professionals

·        In case your freelance consultancy falls within the professions listed above, then you could opt for presumptive taxation under Section 44ADA. Accordingly, the 50 per cent of the gross receipts can be offered to tax.

·        These provisions shall be applicable in case of resident in India.

Rental income

·        As per Section 24(a) of the Act, the rental income chargeable to tax shall be computed after giving deduction for 30 per cent of the rental value.

·        Accordingly, the net of standard deduction of 30 per cent shall be offered to tax in India.

Simplified (new) tax regime

·        Individuals or HUFs with business or professional income must submit Form 10IE if they opt for the simplified tax regime. The form should be given before submission of the income tax return.

·        If you opt for the new tax regime for FY2023-24, it can be withdrawn only once. After withdrawal, an individual with business income cannot opt for new tax regime (until such financial year in which they have no business income).

·        Section 44ADA can be opted for under new tax regime as well as old tax regime.

The author is Partner, Deloitte India

Send your queries to taxtalk@thehindu.co.in

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