Do we have to pay tax for our current account

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This discussion clarifies that income generated from a current account, similar to a savings account, is subject to tax if it exceeds the tax slab. Expenses incurred for generating business or professional income from a current account can generally be claimed as deductions when filing your Income Tax Return (ITR). The frequency of these expenses (monthly or per transaction) is less important than their direct relation to income generation.

Aniket Rawat

Aniket Rawat (Querist)

13 September 2021 1) Do we have to pay tax on our current account income like if the income goes above tax slab just like in savings account?
2) If so, what comes under expenses when filing ITR , do these expenses need to occur every month or each transaction in a year consideres?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

13 September 2021 Tax is not just levied over your transactions, be it Savings account or Current account, but the income generated over these transactions are liable for tax assessment.
Generally current accounts are operated to transact for any business activity or professional.
As per IT act, any amount expended over the generation of income is allowed for deduction.
The explanation is in general. If you have any specific query, the same can be answered in detail.

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Aniket Rawat

Aniket Rawat (Querist)

13 September 2021 Thanks for your valuable answer sir,

I just wanted to know more in detail like how it all works

For Eg. If one's current account receives a payment and he have to pay to his employees but these payments are not regular or monthly basis, so will it count as a expense then, while compensating for filing tax for this account.

Thanks in advance for giving your precious time.

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

13 September 2021 If you are paying on his behalf, then naturally you may be getting just commission for the job. As such keep books of account. Make agreement with the party for the job work. and declare the commission received minus any expenditure related to that income, as you income in your ITR.

Be sure that the work is legitimate, specifically if it involves any foreign remittance.

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