Taxation for contractual employees

This query is : Resolved

sonu kumar (Querist)
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14 February 2016 I have got an offer from an MNC which is trying to get registered in India but till then I will be given a contract for few months. I want to know how will be tax calculated during this period.
and how can I save taxes if it differs from normal Tax rules?
Company is involved in agricultural commodity trading and my profile will be taking care of research activities and building database for trading purpose.

CA Vap Patel

CA Vap Patel (Expert)
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15 February 2016 In such case your income will not be consider as salary but as professional fees. So flat rate of 10% TDS will get deducted from your contract fees. All type of contract gets covered u/s 194C and TDS is deducted @ 1% but your case involved professional work nature hence you will come under 194J where 10% TDS will get deducted. You have no option for saving any tax on this income. You have to file your return and then claim your TDS as refund if you dont have any tax payable.

One more thing, any expenditure you incurred to earn this income will get deducted from your income which will help you to reduce your tax liability

sonu kumar

sonu kumar (Querist)
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15 February 2016 Thanks !
So in addition to TDS , tax will calculated as per slab of 10% , 20% and 30% ?
For example say offered CTC is 15 Lac/annum what will be in hand per month?

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CA Vap Patel

CA Vap Patel (Expert)
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15 February 2016 Lets say your taxable salary is 15lac. So they will deducted TDs of Rs 1.5 lac(10% of 15Lac) so in hand you will receive 13.5 lac. Now when you file return your tax liability will be 2,83,250/- as per 30.9% calculated on slab basis. Now out of that 1.5 lac will get reduce as it is already deducted as tax from your income so net tax payable would be 2,83,250-1,50,000= 1,33,250/-.

sonu kumar

sonu kumar (Querist)
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15 February 2016 Great Understand
So I can't even claim rent paid for tax saving

CA Vap Patel

CA Vap Patel (Expert)
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15 February 2016 Hahaha. As I said in early all expense that you can link with your income earning will be allowed as expense and will help you to save tax directly by 30%. Now how can you link those expense to your income is matter of discussion with your CA. He will help you for sure.

Regards

sonu kumar

sonu kumar (Querist)
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15 February 2016 Thank you sir :)
I don't have a CA friend yet but will make one soon ;)

CA Vap Patel

CA Vap Patel (Expert)
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15 February 2016 Nothing can be better than having a gr8 friend who is CA. He will surely save your lots of money

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