Can professionalsl receive income from 2 sources in different heads-"salary" & "professional fees"?

Luvish Jain (Tax Consultant) (507 Points)
Replied 14 July 2018

Hello Mam,

as per your query, here is my opinion :

1. you cannot show new amount of Rs.20 lacs as under professional receipts.

you can only show it under salaries and thus should file ITR-3 only.

hence you shall not go beyond Rs.50 lacs limit of Sec 44ADA in this case.

For any query you may contact or pm me.

Thanks.

P.S. have not mentioned any rule above assuming not required.

Jatin (Accountant) (3479 Points)
Replied 14 July 2018

Yes, you can receive income from two sources as per your query no issue

Professional Income

Income from Salary

Better if you file ITR 3 & pay taxes according to income tax slabs

Dr.Jyothish Vijay (Dr) (214 Points)
Replied 14 July 2018

Querry.....Are you guys saying that I can make use of section 44 ADA and pay taxes for rs.24.5 lakhs (ie 50 % of rs.49 lakhs via section 44 ADA) and also pay taxes @ 30% for the additional rs.20 lakh i receive as SALARY????

ie i pay tax according to slabs for a total amount of just rs.44.5 lakhs? (24.5+20=44.5 lakhs)!!!

Jatin (Accountant) (3479 Points)
Replied 14 July 2018

No, you can file ITR 3 & calculate tax as per below way

Show your professional Income as profession & deduct all expenses like vehicle maintenance expenses, telephone expenses etc and add income from salary, claim deduction under section 80C, 80D etc.

Calculate tax on taxable income as per slab rates

Dr.Jyothish Vijay (Dr) (214 Points)
Replied 14 July 2018

Sir...plz look at my case:

1)Currently this is how my money is taxed (hypothetical example)

TGR:rs49 lakhs

Actual expense:insignificant ....maybe a few lakhs at most

Under section 44 ADA profits would be : rs.24.5 lakhs

I pay roughly :rs.5.0 lakhs as tax after all deductions (80 C and the lot)

Cash remaining in hand = roughly 44 lakhs !!

2)if i accept the new job:

My total income: rs.69 lakhs

Total taxable income= lets suppose its rs.65 lakhs (ie 69- actual expense) [hypothetical]

Tax to be paid=roughly 18 lakhs

total cash that i retain=47 lakhs (69-18 lakhs)

Therefore you see.....if i were to take up this second job.....break my bones doing this second job.....i retain a paltry 3 lakhs; if i loose the privilage of using section 44 ADA!!! In which case, its probably better to not work extra and happily keep the 44 lakhs !!

Sir....the whole idea of my question is to explore whether i can receive extra money as SALARY from a second job, but WITHOUT loosing the benefit of presumptive profits under section 44 ADA for the 49 lakh i receive from the first job..

I know that i can receive money under two heads....The question is whether i can do so retaining the benefits of section 44 ADA. Or in other words is there a way for me do this legally?

Otherwise...no point in taking up this second job

Luvish Jain (Tax Consultant) (507 Points)
Replied 14 July 2018

Mam, u can use the benefit of sec 44ada as well, and in that case income tax shall not be computed as u r describing in ur example, ur profit i.e. 24.5 lacs and new salary shall be added which will roughly be Rs.44.5 incl of salary i say, In that case u shall be in 30% tax bracket and shall have to pay taxes accprdingly. P.S. u can avail 44ada benefit.