Freelance Developer Tax Queries

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  1. Ankush Chadda

    Ankush Chadda New Member


    I am a fulltime freelancer . I work on freelance websites which help me connect to many International Clients. These websites also serve a purpose of converting another currency to Indian rupees and does NEFT to my bank account. Now, I dont raise any invoice of any kind. I bid on these websites, I get the contract and I get the payment on completion. NOTE - I do not get payments in other currency. I get payments in only Rupees.

    Now, I am assuming my income will be around 12LPA in FY 14-15. I also pay some of the fellow developers for their work, that they do for me.

    Now in this situation,
    • Will I be filling ITR -4 this year?
    • I have heard I can deduct these payments ( given to fellow developers) and other expenditures like laptop or rent of the office where I work, from the total taxable income. Am i right about this?
    • Now as I understand, I provide a service to clients outside India and sometimes to Indian as well. What about my Service tax? How am I accountable for that?
    • I don't believe I have an export business here, but I am not sure, which type of business is this( export or servicing ). I have read about a Export code . Do I need to register it?
    • I keep an excel sheet to account my account inflow and outflow. I have read online that govt advises on specific ways in how to maintain accounts. But in my case, I have very less cash in and out flow. What should be my legal way to handle accounts, if I have to .

    Thanks for going through all my queries.
    Last edited: Aug 23, 2014
  2. Parul_Gupta

    Parul_Gupta Active Member

    Dear Ankush

    1. Yes, you would be filing your Income Tax Return in ITR 4

    2. The Rs. 12 Lakh that you mentioned above is your Total Sales. The expenses incurred by you (like Internet Expense, Telephone Expense, Payments to other developers) would be deducted from the Total Sales to arrive at your Total Income. Tax would then be levied on this total income.

    3. No tax levied on Services outside India (export of service). Service Tax would be levied on Services in India only if the total value of services provided to indian clients exceeds Rs. 10 Lakhs.

    4. You dont need to register for any export code.

    5. Yes, you would be required to maintain accounts. So may be you can hire some CA or B.Com graduate to prepare your accounts and file your tax returns on a freelance basis.
  3. Ankush Chadda

    Ankush Chadda New Member

    Thank you Akanksha23 for all those detailed replies.

    Can you also clear my doubt over advance tax? Do I have to pay it in every quarter?

    Also, some of the blog post online mentioned about Foreign Exchange and Management Regulation, 2000 ( says something about software to be declared before exporting(If its value is less than 25K). Also I have to get the importer-exporter code.

    As I see it, I am not exporting any code, I am providing services to international clients. And as you said earlier, No tax is levied on services outside India.
    Hence there is nothing for me to worry in this case.
    Just wanted to be sure.

    Thanks again.
  4. Parul_Gupta

    Parul_Gupta Active Member

  5. Avishkaram

    Avishkaram New Member

    Hi Akanksha,

    I have a similar situation, however i am going to work directly with client.

    To give you a brief, I have been hired by a US based Company for $40/hour. Company is not registered in India though. Company would release monthly salary in my account without any tax deduction. My PA income would be higher than 36L(based on the dollar rate). Do i need to get ST? Can i register a company and get the benefits from expenditure(Internet, Furniture, Phone etc?).

    I would appreciate if you could suggest if i need to get ST or should i hire a Freelance CA to file my IT.
  6. freetest

    freetest New Member

    Hi Avishkaram, I am interested in freelance work . Can you please let me know the complete details .
  7. Karan Batra

    Karan Batra Well-Known Member

    @Avishkaram : You can claim expenses on your own name as well irrespective of whether you form a company or not
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