Hello all, This is not service tax related question, it is related to all the things I will need in order to do the following. So, I am a freelancer, and I want to start a company of my own now. I had some basic questions in mind. Suppose, my company is expected to generate 20 lakh revenue for the first year, or less than 20 lakh. Out of which, I expect 10-11 lakhs to be the cost and 9 would be profit. Please let me know how much money I will be paying in taxes in such scenerio. Also, my business would be generating money from foreign clients only, it is web design business. Please tell me total tax I am supposed to pay with this case, and number of taxes I am supposed to pay. How much it would cost me to hire you for managing my taxes, registering company and doing all other things for my startup ? I just want to get idea of what I need to do in order to start my company will I be able to really save some amount after doing all those things. Thanks
Hi
You may register a company or even work as a sole proprietor. The costs and compliances in a company would be higher.
If totally receipts are 20 lacs, income tax would be around 1.2 lacs. This would be income tax.
If your turnover exceed 20 lacs, you would require a GST registration. Although there would be no tax liabilities as you can export under LUT, but regular return filing needs to be done.
The charges may be discussed personally.
Since you are a freelancer and going to start web designing business you need to register in GST if the turnover or receipts exceeds 20 lakh. Since you are saying it wont exceed 20 lakh you don't need any GST registration. Even after receiving GST registration since you are going to provide service you can provide your service to foreign client without any payment of GST but for that you need to get an LUT.
Regarding income tax you would be doing a business of web designing and you need to be clear with the selection of words whether you are going to start a pvt ltd company or do business as a proprietor because both are different in income tax and initially i would suggest you to start as a sole proprietor as it would be easy and cost efficient to manage. The tax amount can vary based on how you spend your money or how you claim certain deduction it all depends on your tax planning. At the figures provided by you, you will have to pay around 95k tax which can be reduced if properly planned.
Currently only this two tax would affect you.
If you need more information or consultation we can have a phone conversation.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Hi,
- In respect to the new company having the turnover of more than Rs. 20 lacs, following will be the implications.
a) GST - You need to obtain GST registration and file the returns regularly. In case of export to the foreignclinets, you also need to obtain LUT for export without payment of taxes. In case of domestic sales, GST will be levied @ 18% on the turnover and not on the profit element.
b) Income Tax - Flat rate @26% would be applicable (26% of 9 lacs) i.e. 2.34 lacs will be the income tax. Income Tax Audit will be applicable in case turnover for the single financial year exceeds Rs. 1 crore.
c) Book-keeping and Statutory Audit- Book-keeping, Statutory audit and annual ROC complianceis compulsory under the companies Act.
-- In respect to the new company having the turnover less than Rs. 20 lacs, except GST all the above will be applicable..
Thanks
Hi,
Hope you are doing well !!
-You need to get GST registration only if your turnover/receipts exceeds the basic exemption limit i.e INR 20 lakhs.
-You services will be classified under export of services as you will be providing services to foreign clients only.
Under GST regime, the exporter has either of the two options:
-You will be required to pay income tax@30% plus applicable surcharge and cess (Flat rate for company) on profits.
-Apart from that , you need to comply all the statutory requirements like Maintenance of accounts, Statutory audit, Return filings etc.
- Cost would be discuss over call/mail.
Hello,
Basically, you will be covered under Income Tax and GST,
If your turnover exceeds Rs. 20 Lakhs, you will be required to get GST registration and since you will be exporting your services you will have to obtain LUT for benefits of doing export without payment of taxes.
Under Income Tax, if you form a company for your business, Company's Income will be taxable at 25% + cess 4%. It would be advisable to consider forming a proprietorship firm in the early stages of your business for lower tax liabilities as an individual is taxed at slab rates as compared to a company which is taxed at flat rates.
Apart from the above tow tax compliances, if you register a company, you will have to do annual compliances as per the Companies Act.
I hope this answer satisfies your requirement.
Regards,
CA Hunny Badlani
