Income Tax Liability as Consultant for a fixed time period

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  1. P. Mitra

    P. Mitra New Member

    I completed 64 years of age. I was not working since last two years and could not submit NIL IT Return as was unable to log in for online submission as the online registration was created by my CA who is not available now.
    I received a job to work as a consultant for a time period of 2 years in May 2016. The employer will deduct service tax at applicable rate and will provide Form 16A at the end of F.Y. Now, I shall remain grateful to receive your advice on the following :
    1) I spend a good amount for attending the work by taxi (to and fro) for which no receipt can be provided. In such case whether my claim for deduction of this expense while computing I/tax will be accepted by IT Department ?
    2) I use laptop and internet connection while work from home in addition to daily office duties and if this expense can be claimed as a deduction to reach I/tax payable ?
    3) I use a separate room in my residence exclusively for consultancy work of my employer. How much amount or proportion of rent, I can claim as office rent ? I will not be able to furnish a separate rent receipt for it.
    4) I also use my own stationery for the consultancy work. What documentation I may need to preserve to claim deduction to arrive at the I/Tax payable ?
    5) Is there any other expenses e.g., proportionate electricity charges ( no separate evidence can be provided as it is for the entire flat where I reside with my family) etc can be claimed as deduction to arrive at the I/tax payable by me ?
    6) If I can submit IT Return annually or is it mandatory to submit every month or quarterly?
    7) My Gross consultancy Income is Rs. 9.0 Lacs per annum. What documents should I maintain and for how long as per IT Law to produce if any inspection is conducted or called for.
    8) I am currently residing in Navi Mumbai, Maharashtra where should I submit the Income Tax return ?
    9) Any other provision to avail Income tax benefit ?

    Best Regards,
    P. Mitra
  2. ZED

    ZED Well-Known Member

    He is charging service tax?? Who is the one giving the service you or him?
    Form 16A ? If there is employer-employee relationship then it would be form 16.
    Will you be receiving "salary" or income from profession?
    Your Value of services is below 10 Lakhs, so you are not required to charge service tax.

    I am of the view that it is a contract for service (Profession) and I am answering your queries on the basis of the aforesaid assumption.

    You can not claim any expense, for which you do not have supporting.

    U/S 37, deduction is available in respect of an expense if such an expense is incurred wholly and exclusively for the purpose of business ,and the expense is not in nature of personal expense.

    You can not claim then rent because there are not 2 different persons. Had it been a case of partnership firm, then it could have been done. Partnership firm and partner are 2 different persons in law. Rent agreement can be made. In your case, how will you make a rent agreement? "I will pay rent of xRs p.m to myself...." No, its not possible to claim rent in case of an individual.

    But, its not that there would be no other benefit available to you

    Its bills and the fulfilment of conditions u/s 37.

    I believe you got the answer of this query aswell.

    Return shall be annually only.

    You should maintain records for atleast 6 years (if you do not have any foreign income, otherwise I would recommend for 16 years)

    It can be submitted online for anywhere.

    There is some other advice which I can give but for that I firstly need to know the answer to the questions I asked.
    You may contact me via mail:
    [email protected]
  3. P. Mitra

    P. Mitra New Member

    1) In response to the first query raised by Mr. ZED, I would like to inform that I signed a contract with my employer for two years to provide them technical services as a technical consultant. . My employer informed me that they will deduct service tax @ 10% from the consolidated fee and will provide me form 16A. Can I claim this deducted service tax as a tax paid from my taxable income while submitting IT Return? I am confused about my relationship with my employer as even though I attend office like other regular employee but on paper I am a consultant.
    2) How can I support for attending office of my employer by public taxi for providing daily services?
    3) Yes I use internet connection to fetch various information in connection of my work. How can I prove that I am using internet connection for my work related matters?
    4) Once even when I was not earning, my CA prepared some IT Return and submitted on line. I do not know the password and he left for abroad. I tried to log in with my PAN No. but unsuccessful as neither I know the email id which that CA used nor know the answer of the secret question my CA entered. he is at abroad and we are not in touch. In such case, how can I submit IT Return online??
  4. ZED

    ZED Well-Known Member

    People do take a receipt from such taxi provider along with their vehicle registration no.
    The allowance of this expense is a bit difficult cause in practice people give fake bills...
    I have been at investigation by State govt. for some entities (for other than tax matter) and there I came to know that if the bill is of reasonable amount and distance and fare is correct (as per the meter) and there is proper written receipt alongwith signature or thumb impression of the driver along with the vehicle registration no. then objections are not raised.
    Though I am not giving any assurance as to allowability of this expense. Allowance/disallowance would depend upon AOs personal discretion.

    Deduction will not be allowed for 3rd.

    I would like to see the contract. Further , your case is a bit different, if you want a proper consultancy then send details to my mail id. I believe that I have answered to all the queries asked by you and don't worry about the 4th point, there are other ways.
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