CA Shubham Sarraph (CA CS PROFESSIONAL M.COM) (555 Points)
01 August 2014My friend has received 10 to 15 lacs from USA based companies google, facebook, yahoo etc. for finding loopeholes in their websites. he is receving payment in his indian saving bank account in INR.
What is the tax implication on him under Income tax?
Apllicabilty of TDS and Advance tax??
PLz reply ASAP. Thanks
Parampreet Singh Khurana
(Chartered Accountant)
(49 Points)
Replied 01 August 2014
Sir,
First, As the assesse is performing these services in India, he is a Ordinary Resident
Second, He has received money straight in his savings account.
So, Such income is Taxable in His Hands under the head Business & Profession.
He may claim Expenditure incurred by him if any.
Also Advance Tax Provisions as applicable are required to be followed.
CA PALLAVI VOHRA
(Learner)
(140 Points)
Replied 01 August 2014
Tax implications will be as under:
1. Service tax is applicable on such services @ 12.36% as per Rule 9(b) of Place of Provision of Service Rules 2012 read with Rule 6A of Service tax Rules.The point of taxation shall be earlier of the mentioned dates: (a) date of invoice(if invoice not raised within 30 days of completion of service the date of completion of service) (b) date of receipt of payment.
2 TDS is applicable only when payment of some expenditure is being made. Here your friend has received an income thus TDS provision is not applicable
3. Advance tax is payable on such income at the applicable slab rate on the basis of total expected income of your friend during the previous year.
4. Further if his total receipts during the relevant previous year excees Rs. 25 lakhs, tax audit u/s 44 AB of Income tax Act is also required.
CA Shubham Sarraph
(CA CS PROFESSIONAL M.COM)
(555 Points)
Replied 01 August 2014
Thnx Mr. Paramjeet & CA Pallavi vohra.
As he is working in the capacity of an individual and his total receipt is around 12 to 15 lacs. in current year and in previous year his income in not taxable. He is not raising any invoice to the USA companies.
He is receiving payment in his account in regular manner. What should i suggest him for payment of advance tax.
Comanies is paying him a fix amount.(i think including service tax)
M. N. JHA
(CA)
(8316 Points)
Replied 01 August 2014
wow,............ USA also knows indian are smart in searching anothers loopeholes. Great
CA PALLAVI VOHRA
(Learner)
(140 Points)
Replied 01 August 2014
If Income Tax Liability of any assessee is more than Rs. 10,000 in a financial year, then he is liable to pay such tax in instalments during the year itself rather than paying this tax at the end of the year. The instalments for individual assessee shall be as under:
In case of Assessees other than Companies
| Due Date of Installment | Amount Payable |
| On or before15th Sep | Not less than 30% of the Advance Tax Liability |
| On or before15th Dec | Not less than 60% of the Advance Tax Liability as reduced by the amount,if any, paid in earlier installment |
| On or before15th Mar | 100% of the Advance Tax Liability as reduced by the amount, if any, paid in earlier installments |
CA Shubham Sarraph
(CA CS PROFESSIONAL M.COM)
(555 Points)
Replied 01 August 2014
Thak you Mam..
But his income is not fix. It will depends on his sucessful count.
First, As the assesse is performing these services in India, he is a Ordinary Resident Second, He has received money straight in his savings account. So, Such income is Taxable in His Hands under the head Business & Profession. He may claim Expenditure incurred by him if any. Also Advance Tax Provisions as applicable are required to be followed.
Parampreet Singh Khurana
(Chartered Accountant)
(49 Points)
Replied 02 August 2014
Sir,
At the time of payment of Advance Tax, we see the Total Incoe Recived by the person till that time unless you are aware that how much amount of incoem he is going to receive.
If your friend/assesse has income which cannot be confirmed then comute tax at the amount of income recieved till then.
For Eg,
By 15th Sept he recd 5Lakhs,
Thus Tax will be 30000
Advance Tax = 30000*30/100=9000
By 15th Dec, he recd 25lakh total amount
Tax = 5,80,000
Advance TAx liability 5,80,000*60/100=3,48,000-9000=3,39,000
Thus Adv Tax Payable by 15 th dec will be 339000.
PS : The above calculation are illustrative and w/o Cess
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