| Question And Answer | |
|---|---|
| Subject: | it person household expenses or own drawings limit for one financial year |
| Category: | Income-Tax |
| Querist: | kollipara sundaraiah |
| Answered by: | Law Intern |
| Tags: | drawings, household expenses, section 142(1) |
| Date: | March 3, 2025 |
A Individual small business tax payer house hold expenses rs:5 lacs amount all transactions through bank channel paid f.y. 24-25
Question:
Assessee house hold expenses detailes and any limit provision applicable for one finicial year in it act and house hold expenses detailes asked it department as per sec 142 (1) in it act.
There is no provision in the Income Tax Act that caps or limits the amount an individual can spend on personal household expenses in a financial year. However, the source of funds for these expenses must be explainable and consistent with the taxpayer’s declared income. If the expenses appear disproportionate to the income reported, the tax authorities may scrutinize the case to check for unreported income.
It may be noted that these are personal expenses and cannot be deducted from business income.
As regards Section 142(1), the Income Tax Department can ask for details of your Rs. 5 lakhs household expenses under Section 142(1) if they need to verify your income or suspect discrepancies. Since all transactions are through bank channels, you are in a strong position to explain the source of funds with proper documentation.