Your queries on income tax: Can’t claim actual expenses if opting for presumptive tax

Get expert tax advice on navigating presumptive taxation under Section 58 for software contractors, understanding spousal income clubbing rules on investments, and tax-free share gifting for senior citizens.

Written by Neeraj Agarwala

May 16, 2026 00:05 IST

Personal Finance Q&A: Presumptive Tax Rules for Contractors, Spousal Clubbing Provisions, and Gift Tax Exemption on Shares

l I do contractual software assignments and earn around Rs 30 lakh a year. Can I file presumptive tax and claim benefits of the expenses incurred?—Subash Gupta

For professionals engaged in contractual assignments, presumptive taxation under Section 58 of the Income-tax Act, 2025 offers a simplified compliance framework as 50% of gross professional receipts are deemed to be taxable profits, effectively treating the remaining 50% as presumed expenditure without the need to maintain detailed books of account. However, while bookkeeping requirements are eased, disclosures relating to assets and liabilities continue to be mandatory in the income tax return.

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That said, presumptive taxation comes with a trade-off: actual expenses cannot be separately claimed. Taxpayers with genuinely high business expenditure may instead opt for regular taxation and claim actual costs, provided proper books are maintained. However, professionals declaring profits significantly below the presumptive threshold of 50% may face heightened scrutiny risk, particularly where income patterns or expense claims appear inconsistent.

l I invest in fixed deposits and mutual funds in my wife’s name to save on taxes. She is a housewife with some minor income from home tuitions. Is it a legitimate practice to save taxes?—Sachin Khedekar

If the funds used for such investments originate from your income, the consequential earnings whether in the form of interest from fixed deposits or dividends and capital gains from mutual funds, may continue to be taxable in your hands under the clubbing provisions of the Income-tax Act. In other words, the ownership of the investment alone does not determine taxation, the source of funds assumes greater significance between spouses. Only income arising from your wife’s independently earned funds would ordinarily be taxable in her hands.

l I am a senior citizen. I want to gift shares to my sons from my demat account. How will income tax be calculated for me and my sons?—A. Myilsami

Gifts to specified relatives, including sons, are exempt from taxation. Accordingly, there will be no tax liability in your hands for gifting the shares. When your sons eventually sell these shares, capital gains tax will arise in their hands. The cost of acquisition for these shares will be the same as incurred by you for purchase of the shares.