whytax

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

14mo ago

AITookMyJob

Startup14mo

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.

whytax

Startup14mo

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? :(

potatomato

Fintech Startup14mo

Yep, get a better CA. Registering a proprietorship might be one way to go

potatomato

Fintech Startup14mo

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

whytax

Startup14mo

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

potatomato

Fintech Startup14mo

The limit is 75L now

TeraBaap

Slice14mo

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

whytax

Startup14mo

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

Stealth14mo

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.

Bereal

Stealth14mo

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

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
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

whytax

Startup14mo

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.
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

whytax

Startup14mo

also, thanks for the links. will check out the remotemunshi, and will connect on reddit

lucifer09

Stealth14mo

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

Stealth14mo

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

Stealth14mo

*business expense, not income.

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