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How can I save more money on Tax while working as Full time employee and Freelancer?

Ume (1 Points)

13 May 2022

I am working as Full Time Employee in MNC and getting around 24 Lakhs Per Annum. Recently I got one freelancing opportunity from Singapore and offering me around 54 Lakh Per Annum. However, I need to pay around 16 Lakh as Income Tax. Do I have any option to Save some amount here.

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2 Replies

Kev Men (788 Points)
Replied 13 May 2022

Depending on the nature of your service, if it comes under 'profession' as per the income tax act, you can show it under sec 44ADA and show 50% of the freelancing income i e 27 lakhs as your profit/income on which tax will be calculated. If it does not come under 'profession' you can come consider it as 'business' and show profit at min. 8% of the 54 lakhs i.e. around 5 lakhs as your profit/income.
Nothing much can be done about your salary/full time employee income.

However, since it involves another country i e. Singapore, DTAA provisions might be applicable.

It is my humble advise to consult a CA/tax expert in person for a detailed consultation as it needs expert guidance.

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CA Raj Doshi (Practising CA) (8903 Points)
Replied 13 May 2022

As it is you are paying around 22% in tax on your income from MNC. If you start receiving further income it is like your net income will be around 50 lakhs from both sources. That means you would be paying around 27% in taxes.

Sec 44ADA is not applicable for annual freelancing receipts of more than 50 lakhs. So in that case audit becomes inevitable.

So it is better to make a tax efficient strategy from the inception itself. Please reach out to me for genuine consultation. The amount is huge and it requires good planning for optimum tax savings.

CA. Raj Doshi, raj @ rcdco.in