Declaring loss from personal business
I'm employed in software company entire year earning salary as primary income, but also have little income from my blog websites through ads.
I would appreciate your expert advise to understand how to deal with income tax this year.
a. My expenses w.r.t domain registration, web hosting, laptop etc are 5 times more than the income from websites. (not including my salaries). will I be able to decalre losses this year and adjust next year? do i have to keep books for this?
b.I haven't registered as a company or proprietorship this year, my income from websites is within 1 lac, am I supposed to register? what is the annual turnover above I'm required to register.
thanks in advance
Asked 2 years ago in Income Tax from Bangalore, Karnataka
a. You can certainly show your loss in income tax return this year and claim this loss against profits of subsequent years upto 8 years.
You will have to prepare profit and loss account and balance sheet properly. For eg. purchase of laptop will not form part of revenue Expense, it will be capital asset and depreciation on the same shall be revenue expenses.
b. For income tax purpose there is no requirement of registration. you only need to obtain PAN. For vat purpose, limit depends upon your state law. Vat may not be applicable to you. For service tax, you need to obtain registration, once your taxable services exceeds 9 lac in a year.
For any help on the above matters, you can reach out to us.
CA Abhishek Dugar
No need to register.
Business loss was , previously be allowed to be adjusted with Salary income but it was so much mis-utilised that from Assessment year 2005-06, the adjustment was withdrawn by insertion of sub-section 2A under section 71 which reads as under
(2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), where in respect of any assessment year, the net result of the computation under the head Profits and gains of business or profession is a loss and the assessee has income assessable under the head Salaries, the assessee shall not be entitled to have such loss set off against such income.
Thanks Abhishek & Shyam for helping out here.
I got expense and registration part clear. but one more thing.
If my turnover crosses certain limit do I have to register and pay service tax? in my case the revenues are purely from foreign entity which pays me commission for ads displayed on my blog.
a) do I have to register for service tax?
b) How to go about service tax, considering my customers or revenues are not from India, will I still have to file return every 6 motnhs?
Asked 2 years ago
Just one question..do you receive the amount in foreign currency or in INR?
100% foreign currency - amount is received in USD, as inward-remittance wire transfer.
Asked 2 years ago
If you are rendering services outside india and receiving in USD then there is no service tax applicability
In that case your service tax liability will be nil but you have to take registration under service tax as soon as your value of taxable services exceed 9 lacs
Loss from business can be carry forward for a further period of 8 years and adjusted against the business profits in the future year.
No need of registration of proprietorship business, but yes will have to register yourself for Service Tax but as of now as you are receiving fees from abroad and in Convertible Foreign Exchange there is no need to charge and collect Service Tax.
Trust this clarifies your query.
Feel free to get back/ call back for any further clarifications.
Rohit R Sharma
BCOM, ACA, LLB - GEN, CERT. FAFP