Papinder Singh (Taxpayer) (72 Points)
16 May 2020Hi,
I am working as a freelancer from home, as such I don't have clearly defined expenses related to my profession. What expenses can I claim so I can deduct them from my gross income? Does internet bill, computer equipment etc. count? If so, how should I calculate the amount which I should deduct from gross income?
Please share any helpful articles and relevant laws which shed light on this matter.
Asha Kanta Sharma
(Manager - Finance & Accounts)
(36365 Points)
Replied 16 May 2020
Asha Kanta Sharma
(Manager - Finance & Accounts)
(36365 Points)
Replied 16 May 2020
Papinder Singh
(Taxpayer)
(72 Points)
Replied 16 May 2020
Thanks for the links, the articles are useful. I want to focus on "How to claim expenses common to both personal and professional purposes" as mentioned in the 2nd article, it states:
"When assets claimed or expenses incurred are used for both professional and personal purposes, only a reasonable amount of the expenses and depreciation is allowed as a deduction, and not the full amount."
What are the specific rules which decide what is the "reasonable" amount of expenses? Is it just based on common sense, or is there an actual law about it? It will be helpful if the legal reference is provided so that I can check for myself. I am not a lawyer but I would like to give it a go.
debora M
(BUSINESS DEVELOPMENT MANAGER)
(1697 Points)
Replied 27 May 2020
Freelancing income comes into picture when you get hired to work on specific assignments for a specific term and get paid for the work upon completion and submission. You will not be an employee of the company or placed on their payroll. You will not get perks (like PF) mandated by the Company Act. You are not required to go to the office – in fact, you can complete the work at leisure (by pre-agreed deadline) from any place convenient to you. Any income that you earn by displaying your intellectual or manual skills is the income from a profession according to income tax laws in India. Such income will be taxable as “Profits and Gains from Business or Profession”. Your gross income will be the aggregate of all receipts you get in the course of carrying out your profession. Your bank account statement is a document you can rely on to cull out this information, provided that you have received all your professional income through banking channels.
Papinder Singh
(Taxpayer)
(72 Points)
Replied 15 September 2020
Debora madam, thanks for your reply, but I think most of us know that stuff.
I would appreciate if someone here can point out the related laws which provide guidelines on "How to claim expenses common to both personal and professional purposes". Thank you.
CAclubindia
