Part of Income payed to an associate by an (Individual Freelancer)

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  1. JaiTN

    JaiTN New Member

    Hello Sir/Madam,
    I'm a freelance graphic designer and receive Payment only through PayPal . I used to pay a part of payment for a project to the person who helped in conceptualization of the design. Also to note this is not on permanent basis. Only if the project is success and the person had his input, I pay apart(about 40%) of the Payment I received for that project. How can i deduct the amount I paid to my associate in my total income as I receive only through paypal and i pay him through cash...
    Please anyone help me on this topic..
  2. ZED

    ZED Well-Known Member

    This is your income from profession and the amount which you pay to him can be deducted as an expense. You will need to file ITR-4 and compute P&L. In your case you are mandatorily required to maintain proper books of accounts.[Refer S.44AA(1) for more details in respect of maintenance of records.]
  3. JaiTN

    JaiTN New Member

    Thanks ZED for the reply..But still I've doubts...As I said earlier I earn through freelancing/crowdsourcing sites, so not registered as a company, just working from home online...So what is the legal procedure to maintain account books ..My expenses are nothing other than the equipment purchase(Computer,software) and the amount paid to the person as mentioned in original post(only on project basis-not permanent)..So my question is how to show legally i paid him for a particular project..Will a signed voucher is enough?
  4. ZED

    ZED Well-Known Member

    Yes, Jatin it would be enough provided the Aggregate payment at any one time/day is not more than 20,000 (if made in cash) in respect of a single transaction.

    I can understand that you must be having many doubts and questions but since yours is a case of a professional. Proper procedures will have to follow. I can not recommend you to file your return on your own unless you are well versed with the provision of the Income tax Act.

    What I recommend is to take a proper consultation from some CA or other tax professional in your locality. That would be best for you.

    You may obtain consultation from me as well but the best would be the one in your locality because they can maintain your account aswell.[Small items you can do on your own also , even manually via registeres.]
    Though you might be thinking that it might not be necessary for you but there are things which assessee does not normally knows about.

    Advice: Next year[F.Y 16-17] it will be beneficial for you to opt S.44ADA.

    Email: [email protected]
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