Financial decisions rarely go wrong because people lack intelligence. They go wrong because tax law, investment planning and estate matters rarely get discussed together, even though they are deeply connected. This is the gap Ashutosh Financial Services set out to address once again with a session on income tax planning, personal finance and succession, held for a group of high net-worth individuals in Morbi. Financial literacy has always been treated at Ashutosh as a long-term commitment rather than a one-time exercise, and sessions like this one reflect that ongoing effort to help people make sense of the choices in front of them.
The session, titled “Effective Planning on Income Tax, Finance AND Succession,” was held on 21st December 2022 in Morbi and conducted by Daxesh Kothari. High net-worth individuals face a particular kind of financial complexity. Their income often comes from multiple sources, their transactions attract greater scrutiny, and their estates are large enough that succession planning genuinely matters. A session addressing all three areas together, rather than in isolation, was well suited to this audience.
The discussion opened with the fundamentals of maintaining proper books of accounts, a requirement under Section 44AA read with Rule 6F of the Income Tax Act. Beyond compliance, the session framed this as a matter of self-awareness: knowing what one actually earns, what one actually spends, and where expenses can be trimmed. Proper accounts also help demonstrate financial capacity when it is needed, whether for a loan, an investment, or simply peace of mind during scrutiny.
For business owners, the presumptive taxation scheme under Section 44AD was explained in some detail. Businesses with turnover up to ₹2 crore can declare income at 8% of turnover, or 6% where receipts come through banking channels or digital payments, without the need for a tax audit even if turnover crosses ₹1 crore. Professionals, under the parallel Section 44ADA provision, can declare 50% of receipts up to ₹50 lakh as income. For partnership firms, an important nuance was flagged: this presumptive rate must be maintained after deducting interest and remuneration paid to partners, not before.
The session then moved into deductions available to professionals, doctors in particular, under Section 37, which allows any expenditure incurred wholly and exclusively for professional purposes. Seminar fees and related travel, business entertainment at restaurants, club fees, referral or medical assistance fees, and salary paid to a spouse were all discussed as legitimate deductions, provided they meet this test of being genuinely tied to the profession.
Payments to relatives claimed as business expenses, whether salary, commission, interest, or purchases, came under particular focus. The law does not prohibit such payments, but it does require that they be justified: paid at fair market value, genuinely needed by the business, and shown to have delivered real benefit. The same logic of substance over form applied to gifts. Gifts up to ₹50,000 are exempt from tax regardless of source, while gifts from relatives, a category defined quite broadly under the law to include spouses, siblings, lineal ascendants and descendants, and their respective spouses, carry no upper limit at all. Where money is received and treated as a gift or loan, Section 68 requires that the identity of the giver, the genuineness of the transaction, and the creditworthiness of the person be capable of being proved.
A significant part of the session addressed how cash transactions are now treated under the law. Business expenses paid in cash above ₹10,000 are disallowed, and the same threshold applies to capital expenditure, which will not be added to the cost of an asset if paid in cash beyond this limit. Purchase of immovable property in cash above ₹20,000 attracts a 100% penalty, and loans of ₹20,000 or more can only be received or repaid through account payee cheque or electronic transfer. A newer provision, Section 269ST, tightened this further: no person may receive ₹2 lakh or more in cash, whether in aggregate from one person in a day, for a single transaction, or across transactions relating to one event, with a penalty equal to the amount received for violations. These thresholds explain why the government’s scrutiny mechanisms, including Computer Aided Scrutiny Selection and Annual Information Return verification, pay close attention to cash deposits, high-value payments, and property transactions above specified limits.
The session also touched on the practical question of business structure, comparing proprietorship, partnership, LLP and private limited company formats, and noted that within a family, ideally all members should fall into similar tax brackets rather than concentrating income and higher rates on one individual.
On the finance side, the conversation shifted from compliance to wealth building. A recurring theme was the danger of concentrating everything in one asset class, whether that is a family business or real estate, and the value of building a separate corpus outside it. Four broad avenues of investment were laid out: equity, including direct shares, mutual funds and pension products; debt instruments such as fixed deposits and tax-free bonds; real estate; and precious metals like gold and silver. Historical data comparing a real estate purchase from 1983 to a Sensex investment over the same period suggested that annualised, post-tax returns from equities can outpace what many assume to be the safer, better-performing asset. Similarly, the session encouraged evaluating fixed deposits not just for the comfort they offer, but for their real rate of return once inflation is accounted for.
Mutual funds featured prominently, both as a professionally managed, diversified way to access equity and debt markets, and through comparative data showing several schemes outperforming the Sensex over a two-year window. Systematic Investment Plans were presented as a disciplined way to invest regularly, benefit from rupee cost averaging, and avoid the difficulty of timing markets. A table illustrating the power of compounding reinforced how monthly savings, sustained over 20 or 30 years, can grow substantially depending on the rate of return achieved.
The final part of the session turned to succession, a subject often avoided until it becomes urgent. Under Hindu succession law, if a person dies without a will, their assets pass to Class I heirs, a list that differs for men and women, and notably excludes fathers-in-law and mothers-in-law from a woman’s Class I heirs. Where a will exists, its terms govern distribution instead. The procedural difference matters in practice: intestate succession requires a Heirship Certificate, while a will requires Probate or a Letter of Administration before property can be transferred to beneficiaries. The session closed this segment with a caution relevant to anyone drafting a will: it should anticipate different eventualities, avoid ambiguity around jointly bequeathed property, and leave no loose ends that could later become grounds for family dispute.
Sessions of this kind reflect a simple belief that tax, investment and succession are not separate conversations but parts of the same financial life, and that clarity in one area often depends on understanding the others. Ashutosh Financial Services continues to organise such initiatives across locations, aiming to equip individuals and families with the knowledge to plan more confidently for what lies ahead.
