Taxation for online earners

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  1. ZED

    ZED Well-Known Member

    It will be applicable if Income is chargeable to tax in foreign country aswell. In the current case, the income is being earned in India.


    That is applicable if income is being earned from any source outside India, this would include investments in securities (shares etc) in foreign country , Income from foreign banks, Income from property in foreign country or from business in foreign country.

    Your source of income , prima facie, appears to be in India because your business is in India. (Though , you provide your services to foreign clients)



    Schedule DPM - Depreciation on Plant and Machinery(Other than assets on which full capital expenditure is allowable as deduction under any other section)


    What are the nature of services being provided by you?


    44AA. (1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act.

    (2) Every person carrying on business or profession [not being a profession referred to in sub-section (1)] shall,—

    (i) if his income from business or profession exceeds one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceed or exceeds ten lakh rupees in any one of the three years immediately preceding the previous year; or

    (ii) where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession are or is likely to exceed ten lakh rupees, during such previous year; or

    (iii) where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AE or section 44BB or section 44BBB, as the case may be, and the assessee has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, during such previous year; or

    (iv) where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax during such previous year,



    Required, if turnover exceeds 25 Lakhs in F.Y 15-16 and 50 Lakhs w.e.f F.Y 16-17

    You might be interested in claiming benefit of S.44ADA.
    Kindly go through it thoroughly.

    44ADA. (1) Notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being a resident in India, who is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head "Profits and gains of business or profession".

    (2) Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed.

    (3) The written down value of any asset used for the purposes of profession shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

    (4) Notwithstanding anything contained in the foregoing provisions of this section, an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (1) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.
     
    AVBangalore likes this.
  2. AVBangalore

    AVBangalore New Member

    Hi ZED,

    Appreciate your prompt and detailed reply. That's really amazing, especially considering the fact that there is just one day remaining to file tax return!

    The profession referred in my previous post is freelance product / project manager for software development or mobile app development.

    As I understand, availing benefits of Sec 44ADA, if one's total receipts is about 10 lakhs in the above mentioned profession, one can consider 50% as profit without taking into account any other business expense or depreciation. But deductions under Schedule VI A can still be availed.

    In this case ITR 2 can be a better option?

    Thanks again ZED.
     
    ZED likes this.
  3. ZED

    ZED Well-Known Member

    Wish to update you on the return filing date. It has been extended to 5th of August for all assessees in India except for J&K where the date has been extended to 31st August.

    ITR-2 can not at all be used for declaring income from business or profession. Refer rule 12 for more details.
    When you receive money online, they trail is also maintained online. The Govt. knows how much money you receive, more so in case of paypal. Paypal respects RBIs policy.

    Sir, I requested you to go through the provision thoroughly once. [It is important that you do.]
    The limit is not 10 Lakhs, its 50 Lakhs.


    Let me know If I can help in any other manner.
     
    Last edited: Jul 30, 2016
    AVBangalore likes this.
  4. AVBangalore

    AVBangalore New Member

    Thanks again ZED,

    I went through the provision thoroughly ... made the reference to 10 Lakhs rather than 50 Lacks, as that is the receipts in my case! :) Thanks for being detailed and considerate.

    Regards
     
    ZED likes this.
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