Income of articles

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Prakrut (Querist)
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18 June 2015 Sir,

I am in my first year of internship under the CA program. Apart from my stipend, can i have any other source of income as i heard that an article can not have income other than interest and stipend income. what if i receive tuition fees of 200000 per anum? also can i show the income received as gift from my grandfather not exceeding 50000 p.a.?

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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19 June 2015 Please refer ICAI Training guide. I advice you to carry the activity with the permission of the Institute without indulging in impermissible activities. Moreover, the transaction you proposed is fictitious.

The extract of the relevant clause (2.8) of the ICAI Training Guide is as below:

An articled/audit assistant may be permitted to engage in other occupation of the nature of teaching in a Commerce College or in private tuitions in commercial subjects which are likely to be useful for the course of the Institute’s examination, upto 9 hours per week, basing @ 1 1/2 hours 6 days in a week. The following conditions should be fulfilled and the following certificates should be furnished by the assistant in this regard:
1. The engagement should be either before or after normal office hours of the Principal.
2. An application should be clearly made mentioning the office hours and the timings of the lectures on each day of the week.
3. The Institution wherein he is to be engaged should be in the same town/city wherein he undertakes training.
4. A certificate from the Principal to the effect that such engagement does not interfere with his training as an articled assistant under him.
5. A certificate regarding the time required to be spent/to be devoted per week by the articled assistant from the concerned authorities for the engagement.
6. Permission is not granted where the number of hours prescribed is exceeded.

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Prakrut

Prakrut (Querist)
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19 June 2015 thank you sir, and what about the gift income? can i show that income in my accounts?

under regulation 65, an article assistant can not take up any other course of study or training, whether academic or professional or engage in any business occupation without prior permission of council

here as gift income does not arise due to any business or occupation, in my opinion it can be showed in my books of accounts.

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Asha Kanta Sharma

Asha Kanta Sharma

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31 July 2024 ### **Handling Gift Income in Financial Accounts**

**Gift Income and Tax Implications:**

1. **Taxability of Gifts:**
- **Income Tax Act:** Under **Section 56(2)(x)** of the Income Tax Act, 1961, gifts received in cash or kind are taxable if they exceed ₹50,000 in a financial year and are not covered under specific exemptions.
- **Exemptions:** Gifts received from relatives, or on certain occasions like marriage, or gifts from a deceased person’s estate are generally exempt from tax.

2. **Reporting Gift Income:**
- **Personal Tax Returns:** Gift income should be reported under “Income from Other Sources” in the personal income tax return.
- **Taxability:** If the gift exceeds ₹50,000 and is not exempt, it will be taxable and must be reported as income.

3. **Showing Gift Income in Accounts:**
- **Personal vs. Business Accounts:** Gift income is typically personal income and should not be included in business accounts. Business accounts should only reflect transactions related to business operations.
- **Books of Accounts for Business:** If you maintain books of accounts for a business or profession, including gift income in these books might not be appropriate. It should be handled separately and reported in personal tax returns.

### **Regulation 65 for Article Assistants:**

**Regulation 65 Overview:**

- **Regulation 65** of the Chartered Accountants Regulations, 1988, prohibits an article assistant from engaging in any other business, occupation, or pursuing other courses of study without the prior permission of the Council.
- **Applicability:** This regulation is applicable to the professional conduct of article assistants and pertains to maintaining their focus on their training and duties without engaging in additional business activities or courses.

**Gift Income Context:**

- **Not Related to Business/Occupation:** Gifts received are generally personal transactions and do not fall under the category of business or occupation. Therefore, they do not typically contravene Regulation 65.
- **Documentation:** Even though gifts are personal income, it’s essential to ensure proper documentation and disclosure in personal tax returns.

### **Summary:**

1. **Tax Reporting of Gifts:**
- Gifts exceeding ₹50,000 should be reported as income from other sources in your personal tax return if not covered by exemptions.

2. **Business Accounts:**
- Gifts should not be recorded in business accounts. They should be treated separately and not mixed with business transactions.

3. **Regulation 65 Compliance:**
- Regulation 65 does not specifically apply to the recording of personal gifts, as it is concerned with professional conduct and business engagements.

**In conclusion,** ensure that any gift income is reported in your personal income tax return and not mixed with business accounts. Regulation 65 pertains to the professional conduct of article assistants and does not affect the handling of personal gift income.