Salary to youger brother as business expense

Hi Everybody, @Quicko

I would like to know if I pay monthly salary to my younger brother to help me in research and monitoring of daily intraday cash and F&O trades, can I deduct it as a business expense while filling the ITR ?

If yes, is there any requirement of maintaining digital receipts of amount paid as proof ?


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Bank transactions are enough,if your expenses is low and are not recognised by algorithms of IT

Any expense that is directly connected to your business can be claimed as a valid business expense in the Income Tax Return. You can thus claim the monthly salary paid as a business expense. However, you must have a clear justification and valid proofs to explain it to the Income Tax Officer.

Further, if you pay the salary directly into the bank account, the bank entry is itself a valid proof. However, you must deduct TDS if required and issue Form 16.

For any further queries, write to us on [email protected]

TDS and form 16 mandatory only for salary above 250000 per annum am i right?

Can I claim rent for my own house in which I live, which is in the name of my father as expense while filing itr wrt intraday trading… @Quicko…will the income tax department ask proof for all expenses claimed in case I try to claim fake expenses.

Yes. TDS should be deducted on Salary when the total income of the employee exceeds maximum amount not chargeable to tax i.e. Rs. 2,50,000.
Form 16 should be issued when TDS is deducted and TDS return is filed.

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We would strongly advise not to claim any fake expenses or any expense which is contrary to the provisions of the Income Tax Act. Expense that is directly connected to the business can be claimed as an expense. Paying rent to your father for carrying out intraday trading business does not seem to be an expense where you can justify to the tax officer of its connection with your trading activity.

Here is a list of business expenses that you can claim in ITR - What Expenses Can a Trader claim in Income Tax Return?

What if salary is paid in cash within permissible limit. What proof should we need to keep for this.

If an expense has been paid in cash for an amount exceeding Rs. 20,000, it cannot be claimed as an expense.
In a single day the limit is 10,000.

Yes but what should be the proof for it if for example salary paid to my worker is 5000p.m. What could be valid proof practically.

Salary Slips or Salary Register can be a proof for salary paid in cash. You must take care of the permissible limit for cash expenses of Rs.10,000

For any further queries, write to us on [email protected]

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