Income tax 44ad
This query is : Resolved
08 April 2015
Hi Friends, I am a 17 years old student and also work as a self employed trader. I have made Rs. 5.9 Lakh in the year 20142015. I have made the money through international transactions. The International Tax was deducted at source. I will be filing a 4S for my tax returns.
Can I make use of section 44AD? Would I have to pay tax on only 8% amount, instead of total amount of 5.9 lakh?
Is there any catch or loophole in this system? Would there be any problem if I use scheme 44AD while filing returns?
Can I make use of section 44AD? Would I have to pay tax on only 8% amount, instead of total amount of 5.9 lakh?
Is there any catch or loophole in this system? Would there be any problem if I use scheme 44AD while filing returns?
08 April 2015
you mention exactly what is your business as trader and wat is the exact source of income?
08 April 2015
It is outsourcing, creation and resale of digital content, through internet. There's no use of any raw material or component.
08 April 2015
http://www.charteredclub.com/section-44ad/
refer thsi link under applicability of sec 44ad 2nd point
refer thsi link under applicability of sec 44ad 2nd point
08 April 2015
I have read it and understood. I have a few confusions though. I will be grateful if you could answer all of these.
1. I have not registered this as a business. It is an assumptive business. Using my own pan card for it. Do I need to register my business name? or Can I use section 44AD without registering business name?
2. I don't have any record books. I don't know what kind of record books I need to maintain. I use services like MoneyBookers and Paypal to send and accept money, I have all the receipts and bank statements. Is that enough? or Do I need to have something else also?
3. How much percentage should I put to keep myself out of trouble, would 10% be ok? or should I strictly put 8% according to the scheme? What do you advice, sir?
1. I have not registered this as a business. It is an assumptive business. Using my own pan card for it. Do I need to register my business name? or Can I use section 44AD without registering business name?
2. I don't have any record books. I don't know what kind of record books I need to maintain. I use services like MoneyBookers and Paypal to send and accept money, I have all the receipts and bank statements. Is that enough? or Do I need to have something else also?
3. How much percentage should I put to keep myself out of trouble, would 10% be ok? or should I strictly put 8% according to the scheme? What do you advice, sir?
09 April 2015
Being a minor, your income shall be clubbed with income of your parents. The parents either of your father or mother whose income is highest during the AY.
You cannot file the return on your name.
You cannot file the return on your name.
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09 April 2015
Thanks for your reply, Shiva sir.
09 April 2015
Dear Shiva,
Kindly note that only that income is clubbed which has not been earned through application of own mind/skills of the minor. In this case, I don't see how you are going to club the income.
Kindly note that only that income is clubbed which has not been earned through application of own mind/skills of the minor. In this case, I don't see how you are going to club the income.
10 April 2015
Mr. Nikhil,
Is in your opinion, 'trading' will be treated as 'own mind/skill'?
The person who asking the question, is mentioned in his/her first queiry "self-employed trading".
In addition to that, his/her clarification, mentioned that, "outsourcing, creation and resale of digital contents through internet".
Outsourcing will become 'service', creation becomes 'manufacture' and resale becomes 'trading'.
Where his/her own mind/skill, you seen?
As we aware, trading is nothing but business.
Is in your opinion, 'trading' will be treated as 'own mind/skill'?
The person who asking the question, is mentioned in his/her first queiry "self-employed trading".
In addition to that, his/her clarification, mentioned that, "outsourcing, creation and resale of digital contents through internet".
Outsourcing will become 'service', creation becomes 'manufacture' and resale becomes 'trading'.
Where his/her own mind/skill, you seen?
As we aware, trading is nothing but business.
10 April 2015
so how do you trade? dont apply your own brain? didn't know that..
all you club is passive income or incomes which have been earned in the name of the minor but on account of the work done by the parent..nothing beyond...
all you club is passive income or incomes which have been earned in the name of the minor but on account of the work done by the parent..nothing beyond...
10 April 2015
Mr.Nikhil,
1. You can interpret the provision as per your understanding. Absolutely, I don't have any problem with your interpretation.
2. I understood better, therefore, I don't have any confusion with the provision. I can survive myself during the assessment procedure with my understanding.
3. If, you are capable to answer, try to solve the problem by way of giving better answer than others. Please don't monitor my knowledge, because, I'm not seeking advice here.
1. You can interpret the provision as per your understanding. Absolutely, I don't have any problem with your interpretation.
2. I understood better, therefore, I don't have any confusion with the provision. I can survive myself during the assessment procedure with my understanding.
3. If, you are capable to answer, try to solve the problem by way of giving better answer than others. Please don't monitor my knowledge, because, I'm not seeking advice here.
10 April 2015
Dear Shiva,
1. I am giving answer to the querist only. If you have the better knowledge, then give better answers.
2. I am not monitoring your knowledge but only ensuring that the querist gets the correct reply! (may you also refer to your reply to query on colored income-tax forms for this!)
3. Yes, you are not seeking any advice, but you are giving one. That casts more responsibility on your shoulder to ensure that what you say covers the all possible scenarios.
With regards to the query here, section 64(1A) clearly provides for exclusion of income on account of activity involving application of his skill, talent or specialised know-ledge and experience.
Now whether the above activities mentioned by the querist involves skill or not can be debatable but definitely not an open-and-shut case and definitely not something that you may consider as a settled position. Whether the activities of the minor involve application of skills or not would depend on the facts of the instant case
1. I am giving answer to the querist only. If you have the better knowledge, then give better answers.
2. I am not monitoring your knowledge but only ensuring that the querist gets the correct reply! (may you also refer to your reply to query on colored income-tax forms for this!)
3. Yes, you are not seeking any advice, but you are giving one. That casts more responsibility on your shoulder to ensure that what you say covers the all possible scenarios.
With regards to the query here, section 64(1A) clearly provides for exclusion of income on account of activity involving application of his skill, talent or specialised know-ledge and experience.
Now whether the above activities mentioned by the querist involves skill or not can be debatable but definitely not an open-and-shut case and definitely not something that you may consider as a settled position. Whether the activities of the minor involve application of skills or not would depend on the facts of the instant case
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