• Taxes details on income other than salary

I am a Individual who is earning other income apart from my regular salary, this other income comes to me as Consultant fees for which i have TDS dedcutions i would like to know when i file my ITR how is it shown in my returns is it shown separately or how is it calculated, i come under the tax bracket of 30%
Asked 9 days ago in Income Tax from Chennai, Tamil Nadu

Hi

You need to show such income as Income from profession. The tax slab rates shall apply.

Considering your profession is eligible under section 44ADA, you can opt for presumptive taxation whereby 50% of your gross receipts shall be considered as income; remaining 50% presumed to be expenses.

Lakshita Bhandari
CA, Mumbai
2396 Answers
88 Consultations

5.0 on 5.0

Hi,

 

A professional having a gross revenue upto Rs 50 lakhs can opt for the presumptive scheme of tax wherein he can straightaway offer 50% of the gross revenue as his taxable income and pay taxes as per his slab rates on such income. Once he opts for this scheme, he cannot claim any of the profession related expenses as a deduction again.

 

So, you can opt the presumption taxation scheme and file the return under Section 44ADA of the Income Tax Act.

 

 

 

 

Karishma Chhajer
CA, Jodhpur
741 Answers
4 Consultations

5.0 on 5.0

Capital gain is chargeable on transfer of capital assets not on investment.

Karishma Chhajer
CA, Jodhpur
741 Answers
4 Consultations

5.0 on 5.0

Hi,

- Income from consultancy may be treated as income from profession. As you have not mentioned nature of profession so it can't be decided whether benefit of section 44ADA would be available or not. Assuming you are not getting benefit of 44ADA, you need to pay difference of 20% tax.

 

- For capital gain, you need to share the date of acquisition of shares 

 

Thanks

Vivek Kumar Arora
CA, Delhi
1858 Answers
63 Consultations

5.0 on 5.0

Capital gains are chargeable to tax at the time of sale of such investments. The investments need to qualify as a capital asset in accordance with the income tax for charging capital gains tax.

Capital gains may be short term or long term depending upon the period of holding.

The calculation of capital gains differ for various of such classifications - type of capital asset and whether the capital gains are long term or short term.

Please be specific as regards to your investment so that we may guide you properly.

Lakshita Bhandari
CA, Mumbai
2396 Answers
88 Consultations

5.0 on 5.0

The eligible professions under 44ADA are

  • Engineering
  • Legal
  • Architectural profession
  • Accountant
  • Medical
  • Technical consultant
  • Interior business
  • Other notified professionals such as authorized representatives, film artists, certain sports-related persons, company secretaries and information technology

What are the kind of services you are providing? I assume your TDS is deducted under section 194J.

Lakshita Bhandari
CA, Mumbai
2396 Answers
88 Consultations

5.0 on 5.0

Hi,

-  Eligible under 44AD and not 44ADA. Minimum income will be 8% of total receipts.

Vivek Kumar Arora
CA, Delhi
1858 Answers
63 Consultations

5.0 on 5.0

Sec 44ADA covers the income of an assessee who is engaged in -

Any profession referred to in Section 44AA(1) such as -

  • Legal
  • Medical
  • Engineering
  • Architectural Profession
  • Profession of Accountancy or
  • Technical Consultancy or
  • Interior decoration or
  • Any other profession as is notified by the Board in the Official Gazette

 

Your services are not covered under 44ADA.

 

 

Karishma Chhajer
CA, Jodhpur
741 Answers
4 Consultations

5.0 on 5.0

To avoid litigation, show it as income from other sources and pay 20% tax. TDS deducted u/s 194J does not mean it is professional income though section 194J is for professional income.

Vivek Kumar Arora
CA, Delhi
1858 Answers
63 Consultations

5.0 on 5.0

No, income from forex trading cannot be considered as consultancy fees. It would be considered as income from business or capital gains depending upon your intent of investments and frequency of transactions.

Please let us know the nature of services provided by you for confirmation of eligibility of presumptive taxation under section 44ADA. Mere deduction under 194J is not conclusive proof.

44ADA can be opted by professionals having annual gross receipts upto Rs. 50 lacs.

Lakshita Bhandari
CA, Mumbai
2396 Answers
88 Consultations

5.0 on 5.0

Section 44ADA says if you are earning from any profession of accountant, doctor etc and if your total receipt is upto Rs 50 lakh then you can show it's 50% as your income from that profession and you don't need to maintain books of accounts.

If you have only done investment then no capital gain tax is to be paid capital gain tax needs to be paid if you sell your investment and it will be calculated as sale consideration less indexed cost of acquisition.

If you are doing Forex trading it will be business income and not professional income and if it's non speculative i.e. it is not intra day then you can declare it's income at 8% of turnover or at actual profit whichever is higher.

It's not always necessary that if TDS has been deducted under section 194J then it's professional income so you must be able to prove that TDS deducted is actually your consultancy income and the limit has been discussed by myself above.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
694 Answers
5 Consultations

5.0 on 5.0

Hi,

 

Hope you are doing well !!

 

Generally,the income received from consultancy is classified as income from profits and gains of business or profession, whereas in case of employment, it is considered as salary income. 

 

There is no special rate for taxation of consultancy charges i.e as per slab rate.

 

 

Payal Chhajed
CA, Mumbai
1266 Answers
9 Consultations

4.8 on 5.0

Q.2 Is Capital gain tax charged on Big Investment amount if yes how much and how is

 

The capital gain tax needs to be paid on transfer of capital assets.

 

There is no capital gain tax liability on investment amount.

Payal Chhajed
CA, Mumbai
1266 Answers
9 Consultations

4.8 on 5.0

Q.3 Hi Thanks but in laymans term please explain on elgiblity of profession under 44ADA and please advise can i treat my income from Forex trading as consultancy fees ,thanks

 

The below-mentioned professions can avail benefits of Presumptive Taxation Scheme under Section 44ADA:

  • Engineering
  • Legal
  • Architectural profession
  • Accountant
  • Medical
  • Technical consultant
  • Interior business

 

if the person indulge himself in the business of Forex trading such income shall be taxable under the head "Business Income".  In other case it may be covered under the head " Income from other sources". 

In your case, you can take the benefit of section 44AD.

 

In case of a person adopting the provisions of Section 44AD, income is computed on the presumptive basis at the rate of 8% of the turnover or gross receipts (6% for digital receipts) of the eligible business for the year.

Payal Chhajed
CA, Mumbai
1266 Answers
9 Consultations

4.8 on 5.0

Q. 4 My TDS is under 194J, so can i on that basis take my profession fees as consultant and is there any Amt limit caps on this section

 

Even if your TDS has been deducted u/s 194J, it is better to declare the income under business head.

Payal Chhajed
CA, Mumbai
1266 Answers
9 Consultations

4.8 on 5.0

It can be shown either under business income or capital gain. For business income, first we have to see turnover from that trading then only we will comment. 

Vivek Kumar Arora
CA, Delhi
1858 Answers
63 Consultations

5.0 on 5.0

For forex trading, you may opt for section 44AD presumptive taxation whereby 6% (in case of digital transactions) of the turnover shall be considered as income.

Such income then shall be taxable according to the tax slab rates.

Lakshita Bhandari
CA, Mumbai
2396 Answers
88 Consultations

5.0 on 5.0

Dear Sir,

 

As explained earlier :

 

In your case, you can take the benefit of section 44AD.

 

In case of a person adopting the provisions of Section 44AD, income is computed on the presumptive basis at the rate of 8% of the turnover or gross receipts (6% for digital receipts) of the eligible business for the year.

Payal Chhajed
CA, Mumbai
1266 Answers
9 Consultations

4.8 on 5.0

Forex trading is generally speculative business so you need to show that income under the head speculative business in your income tax return.

If you want I can help you with filing income tax return.

Naman Maloo
CA, Jaipur
694 Answers
5 Consultations

5.0 on 5.0

Hi

 

It seems your query is already answered.

In case any other clarification required ,please follow up.

 

 

Swati Agrawal
CA, Indore
749 Answers
2 Consultations

5.0 on 5.0

If it's only an investment and you're receiving interest for the same, you cannot show it as a professional income.

Also, the company should be deducting TDS under section 194A and not under section 194J. Please reconfirm the same. You may ask from the company or check your 26AS statement.

For interest incomes, there is no presumptive taxation. However, you may deduct expenses directly attributable to earning such income.

We may further discuss it to manage a way out by understanding the complete scenario.

Lakshita Bhandari
CA, Mumbai
2396 Answers
88 Consultations

5.0 on 5.0

So you are saying that you have invested in some company which deals in Forex and you earn interest income from that company on which they deduct TDS u/s 194J and therefore you want to show that income as professional income?

I don't think that's correct if you are earning interest then they must deduct TDS u/s 194A and if you are also providing consultancy service then it's TDS must be deducted u/s 194J and then you can show such income under 44ADA by claiming some expense by showing cash withdrawal from bank.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
694 Answers
5 Consultations

5.0 on 5.0

- It will be taxable under the head income from other sources. You can not take the benefit of presumtpres taxation for this source of income. TDS should be deducted under the head 194A and if you are getting it deducted under section 194J to avoid tax then you are in wrong direction. You can claim expenses incurred to earn this interest. You are required to pay difference of 20%.

Vivek Kumar Arora
CA, Delhi
1858 Answers
63 Consultations

5.0 on 5.0

Hi,

 

It will be treated  as interest income and you can not tax the benefit of presumptive taxation scheme on the same.

 

  

Payal Chhajed
CA, Mumbai
1266 Answers
9 Consultations

4.8 on 5.0

Are you trading in Forex or are you providing consultancy services on forex trading to your clients? If you are trading in Forex, you need to offer income on such forex trading income as business income / other income depending upon the nature of transactions. If you are earning income as a consultant for providing advises on forex trading, the amount received from your clients is your professional income and is assessable under the head "Income from business / profession"

I don't think that your business income can be assessed under presumptive taxation.

B Vijaya Kumar
CA, Hyderabad
880 Answers
62 Consultations

5.0 on 5.0

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