paying 48% tax. need a CA's advice
I'm a software dev contractor and I'm working for 2 companies, having a total income of 50L per annum. when I consulted a CA, he mentioned that I'll have to pay 18% GST (since business income is over 20L) and will also have to pay 30% income tax. i understand taxes are important and all, but I'm so not willing to give 6 months of my hard work to the government. can anyone please advise me on what to do to save on taxes
Isn't presumptive limit now at 75L for professionals?
Also, IMO it seems like you need a better CA. A good one I think might help you legally save on the GST.
yep planning to consult another CA as well.
and yeah even I read somewhere the limit is 75l now but when I asked him he mentioned nothing of that sort.
but in both cases, the CA suggests having some expenses or else at the time of scrutiny they could question where the 50% expenses are going? :(
Yep, get a better CA. Registering a proprietorship might be one way to go
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Pure nonsense. Your CA is trying to apply what someone told him. Pls use presumptive tax, so you dont pay 30% on full income but on profits
Probably can skip gst also imo
yes, he suggested presumptive only. but he expects me to show "business" expenses to avail the 50% taxable income. i mainly invest here and there and go on a few trips, both of which I cannot claim as business expenses.
GST as much as I've heard is compulsory else the fines are hefty. let's see going to consult another CA anyway. thanks
VagueElbow
Stealth
a year ago
Bhai presumptive is made so that you don't have to show and declare expenses the departments assumes 50%. If your CA is telling you this you need to find a better one and maybe even report him to ICAI.
Unless you have salaried income too, you only need to pay taxes after GST on half of your income as a contractor. Also you can charge GST to your clients
the amount I get is fixed. so I can't charge my client more.
by half income, are you referring to presumptive taxation? since my income is a little over 50l I'll have to get my accounts audited, and I don't have a lot of business expenses
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Bereal
Stealth
a year ago
So I have been on Reddit and there’s one guy who’s specially for contractors and freelancers
His website is : remotemunshi.com
Regarding taxes
1. You can use 44ADA presumptive tax and your total profit would be 50% or your earning which would be 25L in this case. You just have to pay taxes on that
2. Regarding GST, you should have applied for GST number. If you already have then unfortunately you have to pay 18% GST. Now you can skip it but there are chances you might get caught.
I am in the same field as you and if you need more help you can ping me on Reddit, my id is coldvibe1
https://reddit.com/u/Coldvibe1/s/i6BhwGPmeT
1. yep I'm aware of this. but here I can't save that other 50% it seems, or at least that's what the CA told me. He says you will have to show it was a business expense, and investing or keeping it in the bank is not a business expense.
2. i haven't applied yet, but I read online a bit, and it says that the penalty on this is a lot and is very easy to catch when my ITR says the income from business was over 20L but no GST number was linked
also, thanks for the links. will check out the remotemunshi, and will connect on reddit
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You do need to pay GST. But GST can be charged from your employer. They can collect it from the government when they file their GST. GST is paid separately to all vendors so shouldn't be a concern.
On top of that, you can use 44ada to file your taxes and save 50% from taxable income
It's not 48% lmfao, your income will be lowered if you show GST on gross basis 100/118 * your income = actual income and slab rate on top of it depending expenses, your income boils down to 42/2 = 21 L if dot 50% is opted for, doubt you're paying 48% net effective lmfao
yes I understand. if income is ₹100, the 30% is on ₹82 and not ₹100.
and yes I'm aware of presumptive taxation, but the CA here says that you need to show business expenses to be on the safe side in case a scrutiny comes in the future.
it's like I can't invest the money anywhere, or spend on myself and say 50% was my "business" expense
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Recently my partner had the same issue and her CA sorted this out. Expenses and bills can be managed so it won’t be much of an issue you need to get a better CA bro he is fooling you.
oh that's nice. you know any place where I can get hold of a decent CA, who knows about presumptive taxation and gst on services? I'm not sure if I should get my filings done online through a CA because what if they stop replying or whatever when a scrutiny comes. thoughts?
SmartDawn
Stealth
a year ago
In relation to your GST Liability, you can charge the companies you are associated with your fees + GST. The companies will be able to take the benefit of such GST charged in the form of input tax credit. You will not be required to pay out of your own pocket. For income tax, your income shall deemed to be 50% under presumptive scheme i.e., 25L on which you have to pay as per the slab rate (30%)
my company isn't Indian actually. i recently got to know that this becomes an export of service which does not attract GST. so let's see will have to consult a few CAs to get full clarity on this.
and yes I'm aware of presumptive taxation as well. but I'm told that I'll have to show them as business expenses and cannot just keep them in the bank or investment where I feel like to get the 50% exempt. you know any CAs and how much does a decent one charge?
SmartDawn
Stealth
a year ago
I just broadly explained it. I’m a CA myself. Would love to connect :)
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podalanga
Stealth
8 months ago
GST is something you charge your clients. That's not tax.
If you have foreign clients, just get out of India for 6 months. Voila, 0 taxes.
As you work both indian and foreign company. You don't have to pay GST on foreign income but you need to take LUT. For indian company you will have to pay GST. I can connect you with good CA but what stage are you right now already messed up or planning these for future. Tax liability depends on it.
well_wisher
Stealth
a year ago
CA farzi hain
lucifer09
Stealth
a year ago
Are you working for Indian company or a foreign company?
lucifer09
Stealth
a year ago
Section 44ADA itself means that there is a default assumption that 50% of your annual income is being spent as business income. You do not need to maintain records or get your finances audited.
For GST part, if you are working for a foreign client, then you will file GST for export services with is 0%, but you will have to keep the FIRC with you just in case if need arise for proof.
And if you are working for Indian client then I guess 18% is correct.
lucifer09
Stealth
a year ago
If you wish to pay tax on even less than 50% of your annual income, then you will have to get your finances audited and maintain the expense list which you can show as business expense.
lucifer09
Stealth
a year ago
*business expense, not income.
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As a software dev contractor, won't you come under 194J...i think only 10% is required.
