Taxation for online earners

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  1. asdf

    asdf New Member

    Respected Sir,
    I am an online earner. Probably earning through Paypal. I heard that Paypal is hated by RBI but don't know the reality. So, please guide.

    Secondly, how to file Income Tax Returns?

    How is Income Tax calculated and What all are the rules governing the same. Please advise

    Thanks in advance
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    Paypal is not hated by RBI, it is only that many people earning Income through Paypal were earlier not paying taxes on the income earned and therefore they have levied several checks on payments received through Paypal.

    For computing your Total Taxable Income, the following formula would be applied-

    (Total Value of Services provided) - (Expenses incurred to earn such income) = Total Taxable Income

    Tax on this Total Taxable Income would be levied as per the Income Tax Slab Rates. For Income Tax Slab Rates which indicate the rate of tax to be levied, kindly refer -
    asdf likes this.
  3. asdf

    asdf New Member

    Respected Gaurav Sir,

    Thanks for the prompt reply. Please enlighten further.

    1. The expenses could be website development cost OR extra manpower expense OR maintenance cost. Who tells RBI OR Taxation Dept about this?

    2. Will there be problems in filling Income Tax returns because the rule says - Tax should be deducted from source ?

    3. The slab rates defined by you speak of Salaried employees, i.e., those who earn fixed income (say, Rs. 25000/- per month). My income would be variable changing on daily / monthly basis. So, how will that help?

    4. The exployer in this case is not from India and most of the payments will be $ based, So, do I need to register with FEMA ????

    Would request you to kindly explain in this regard.
  4. agreed, why when one earns through any legal source why he wants to cheat i cannot make out what benefit he gets?
  5. trust must be safeguarded by any, tax payer if not knowing laws can make errors but errors should not invite penalties, as most people are busy in their activities, so most tax payers engage consultants like CAs, but i find some CA due to ignorance of latest notifications of dept of revenue do fail their clients, i think at least the ward he normally files always update him so that his clients would not be exposed to unnecessary harassment, i think
  6. gaurav_kumar

    gaurav_kumar Well-Known Member

    1. It can be any expense related to your business. However, to claim an expense - you should relevant bills for the same. The tax authorities can check the bills at any time and in case you dont have the bills - a penalty will be levied on you. So only claim the expenses which are related to your business and for which you have the bills as well.
    2. Yes, the tax should be deducted at source. But, if the tax is not deducted at source, you will have to yourself pay the tax from the income that you've received. No penalty in this case, as it is not your fault that your Tax has not been deducted at source.
    3. The Slab rates shared above are not only for Salaried but for all types of taxpayers. Your income would be computed on an annual basis and tax would be levied on your total income.
  7. gaurav_kumar

    gaurav_kumar Well-Known Member

  9. right.

    agreed sir.
  10. AVBangalore

    AVBangalore New Member

    I believe ITR 4 is the most appropriate form to fill for someone who is earning as freelancer online for foreign client and receiving payments through paypal about 10 lakhs in the FY 15- 16. Can you answer following doubts:-

    1. Since income is entirely through paypal and it comes through foreign client is it required to fill Sheet FSI of ITR 4? The sheet seems to be for NRIs as it asks for TIN number of assessee allotted in the foreign country, which a freelancer working from India will not have.

    2. In Part B - TI TTI Ser 14 of ITR 4, what should be the answer to the question - "Do you, at any time during the previous year, have income from any source outside India?" - Yes or No.

    3. Where to add depreciation, at sheet 'Profit and Loss' Ser No 14 or Schedule DPM-DOA? Adding depreciation at at Ser No 14 of 'Profit and Loss' does not gets reflected in IT calculations in subsequent pages! Depreciation is required for purchase of laptop and other such devices for work.

    4. Is filling of balance sheet required?

    5. Is getting audited mandatory if receipts are less than 10 lakhs?

    Thanks ...
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