Salaried, resigned and started self employment in same fy

This query is : Open

Prasanth (Querist)
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01 April 2013 Dear Experts,

I was working as a S/W Engineer in a company till 21 Nov 2012. I started a website last year and started getting around Rs. 1 Lakh/month as advertisement revenue and affiliate sales commission from Sept 2012 from that website(mainly from US through PayPal and some cheques). Then, I resigned from my full time job on 21 Nov 2012 and started working on the website from home. My previous company deducted TDS properly and I will get Form 16 from them. I got around 3 lakhs as salary and 3 Laks from the website when I was working there. So, I think I can show the website income as income from other source when file return. My doubt is regrading Income Tax on the money I got after I resigned (around 6 Lakhs).

My questions are:

1. Whether I have to file both ITR-1 and ITR-4?
2. How can I save tax from both these incomes if I file it separately?
3. Is there any tax exemption on the income I got from oversees? (As I'm contributing something to our economy)
4. Can I deduct the expenses for running and maintaining the website from my revenue?

By the way, I'm planning to set up a start-up company withing the next FY.

Please guide me on this. Any resource for clarification will be highly appreciated.

Thanks in advance,
Prasanth

Anand

Anand (Expert)
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01 April 2013 Dear Prasanth
Congratulations on your venture.
1. At the moment you will have to file a single return in Form No. ITR 4. You cannot file separate returns for a single PAN

2. Question 2 remains moot, by virtue of answer to Q.1 above.

3. As a resident of India, you will be taxed on your Global income. There is no exemption available for contributing to economy, for the nature of work you are doing as it is advertisement & sales commission.

4. You can claim the expenses of running & maintaining the website from the revenue earned. This is an avenue of tax planning for you.

Apart from the queries raised by you note as under
a) Please consider the applicability of service tax to your case. As such i am not an expert on that front.

b) You should ideally consider the website income as income from business. You can claim depreciation on assets also apart from actual cash expenses

Hope this helps.

Message likes : 1 times

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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23 May 2013 I agree with the expert

Message likes : 1 times

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Prasanth

Prasanth (Querist)
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22 July 2013 Thank you Anand for your expert advice. I have one more query. Can I fill ITR 4S and apply Section 44AD and show the Income @ 20%

Ref: http://www.indiantaxupdates.com/2013/03/04/assessing-online-income-us-44ad-in-india/

Somewhere I read that, "This section is not applicable to business man earning commission income or agency income." Is this applicable for me as I am not getting direct sales commission? I am getting online marketing revenue, through some quality price clicking calculation from eBay Partner network. It is not direct sales commission.

Is there any effect of Alternate Minimum Tax under Sec 115JC in my case.

Ref: https://www.caclubindia.com/forum/negative-implications-of-sec-44ad-249192.asp