Salaried + freelancer (how to calculate and pay tax?)
This query is : Resolved
02 August 2011
Hi experts !!!
I am basically a software professional employed in a private firm which does TDS for me. From June 2011, I have also started doing freelancing and so I am getting an additional income (in-fact 4 times that of my salary from the firm).
I know that I need to file ITR4 instead of ITR1 in upcoming year (2012).But I am unclear on the following.
1. My Tax slab will increase from 20% to 30% if I include my latest additional income this year. But my employer does the TDS at 20% right? How should I calculate for the rest?
2. I have been saving a part of my additional income for tax alone (not investing it anywhere) and using the rest of the amount in housing loan-repayment. At what intervals should I be doing self-assessed tax payment for my additional income.
3. Can I save anything on my additional income in terms of tax benefits similar to my salary?
I am basically a software professional employed in a private firm which does TDS for me. From June 2011, I have also started doing freelancing and so I am getting an additional income (in-fact 4 times that of my salary from the firm).
I know that I need to file ITR4 instead of ITR1 in upcoming year (2012).But I am unclear on the following.
1. My Tax slab will increase from 20% to 30% if I include my latest additional income this year. But my employer does the TDS at 20% right? How should I calculate for the rest?
2. I have been saving a part of my additional income for tax alone (not investing it anywhere) and using the rest of the amount in housing loan-repayment. At what intervals should I be doing self-assessed tax payment for my additional income.
3. Can I save anything on my additional income in terms of tax benefits similar to my salary?
02 August 2011
Q- But I am unclear on the following.
1. My Tax slab will increase from 20% to 30% if I include my latest additional income this year. But my employer does the TDS at 20% right? How should I calculate for the rest?
Reply
You can fulfill your obligation by paying quarterly advance tax. You have to estimate your Annual tax liability by including the salary income with the Business Income.
This will be your expected Gross Total Income.
It is assumed by me that you will show the repayment of housing loan & interest to your employer but will not show him your business income.
The figure of available deductions if reduced from the above, the balance will be called as Esti. Total Income. Calculate tax upon Total Income.
From this you can deduct the expected TDS amount likely to be deducted by the employer.
The balance is tax payable by you which can be paid in 3 installments.
30% of the Balance Tax Liability to be deposited by you on or before 15.09.2011
Upto 60% of it to be deposited on or before 15.12.2011 and the balance to be deposited on or before 15.03.2012.
1. My Tax slab will increase from 20% to 30% if I include my latest additional income this year. But my employer does the TDS at 20% right? How should I calculate for the rest?
Reply
You can fulfill your obligation by paying quarterly advance tax. You have to estimate your Annual tax liability by including the salary income with the Business Income.
This will be your expected Gross Total Income.
It is assumed by me that you will show the repayment of housing loan & interest to your employer but will not show him your business income.
The figure of available deductions if reduced from the above, the balance will be called as Esti. Total Income. Calculate tax upon Total Income.
From this you can deduct the expected TDS amount likely to be deducted by the employer.
The balance is tax payable by you which can be paid in 3 installments.
30% of the Balance Tax Liability to be deposited by you on or before 15.09.2011
Upto 60% of it to be deposited on or before 15.12.2011 and the balance to be deposited on or before 15.03.2012.
02 August 2011
2. I have been saving a part of my additional income for tax alone (not investing it anywhere) and using the rest of the amount in housing loan-repayment. At what intervals should I be doing self-assessed tax payment for my additional income.
Reply-
In case of Interest paid on housing loan
you will get deduction up to the interest amount of Rs 1.50lac, assuming that the construction is completed and the house is
being occupied by you only.
Principal repayment will be considered U/s 80C where you can get max deduction under this section up to Rs 1.00 lac.
You can invest in such Bonds which avails you additional deduction U/s 80CCF up to Rs 20000/-.
It is hoped that you will appreciate the idea of depositing the tax amount with the Govt. by way of ADVANCE TAX Payments.
It will save you from the potential interest liability on tax.
Reply-
In case of Interest paid on housing loan
you will get deduction up to the interest amount of Rs 1.50lac, assuming that the construction is completed and the house is
being occupied by you only.
Principal repayment will be considered U/s 80C where you can get max deduction under this section up to Rs 1.00 lac.
You can invest in such Bonds which avails you additional deduction U/s 80CCF up to Rs 20000/-.
It is hoped that you will appreciate the idea of depositing the tax amount with the Govt. by way of ADVANCE TAX Payments.
It will save you from the potential interest liability on tax.
02 August 2011
3. Can I save anything on my additional income in terms of tax benefits similar to my salary?
The avenues of tax savings have already been discussed above. You can further get Deduction in respect of Medi-Claim Premium
paid for your family as well as for parents U/s 80D, according to the possible requirement of Medi-Claims.
The avenues of tax savings have already been discussed above. You can further get Deduction in respect of Medi-Claim Premium
paid for your family as well as for parents U/s 80D, according to the possible requirement of Medi-Claims.
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02 August 2011
I agree with the expert. Let me give you another advise. If you are married then open a firm and make your wife as the proprietor and she can pay you for your services as salary which will reduce your tax burden
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