Hi, I am a tech executive who had a single source of earning (my salary) for last 12 years. In July 2019, I started creating some online courses and began hosting them on global e-learning platforms not expecting much earning from it. However, the courses took off and I am beginning to make decent cash. I receive monthly payments from those platforms for which I am paying advanced tax monthly (15% of revenue). I am now thinking of creating a sole proprietorship for my online earnings. Is it possible to treat my earnings this financial year as part of the sole proprietorship and not my personal earning? My annual earning from the courses would likely be less than Rs. 20 lakhs for this financial year but is expected to increase next year. Should I register for GST? Do I even need GST registration since my earnings are royalty based and are export oriented. I am sorry if my question sounds stupid. I an an expert in my area (technology) but struggle with tax stuff. If you have helped clients like me before (guys with regular jobs having internet based secondary source of income) I would love to buy your services. Thanks, M
Hi,
Yes, from next year onwards, you would be required to take gst registration.
Further, sole proprietorship will not help. There is no distinction between sole proprietorship and personal income. If you want to keep this income separate, you need to open a company/LLP.
We arr helping many such clients. Happy to help you.
Further, Why ate you paying 15% advance tax monthly. Advance tax is required to be paid quarterly and after proper calculation.
Thanks Lakshita. I read somewhere about section 44ADA of income tax (presumptive taxation) and I calculated 15% based on that. Since my salary puts me in the 30% income tax bracket, I am taking 30% of 50% of any income that I get from my side business. Regarding paying monthly and not quarterly, I doubt IT department will mind it :)
Your entire income will not be taxed @30% even if you are in 30% tax bracket. Further, your salary income will also needs to be considered for calculating advance tax. Thus, a proper calculation should ne undertaken otherwise you may have to pay interest later or it can result into refund situation
Yes, tax department will not mind if you are paying it monthly.
Sir in income tax there is no concept of treating the proprietorship as separate from its owner.
So such course income would also be included in same return as your salary income.
If its below 20 lakh then you are not required to register for GST.
You can register next year and I can help you with same.
Dont worry you dont have to think like that you are good in your work and we are good at we do.
I have many clients earning from Google or from clients outside India so if you need I can guide you.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
You wont fall under 44ADA, you would fall under 44AD.
Further, in case you are opting for 44ADA, 100% advance tax is to be paid only in the month of March. You don't need to pay advance tax before March.
Dear Sir,
Hope you are doing well !!
No, it is not possible to treat your earnings this financial year as part of the sole proprietorship and not your personal earning because there is no distinction between sole proprietorship and personal income.
You need to get GST registration only if your turnover/receipts exceeds the basic exemption limit.
So, Next year you are required to get the GST registration.
Income tax department will not mind if you are paying advance tax monthly.
However,any person opting for the presumptive taxation scheme under section 44AD is liable to pay whole amount of advance tax on or before 15th March of the previous year.
Hello,
Sole proprietorship and Individual(personal) are the same things in the eyes of GST and Income Tax. All your income would be considered in your total income for Income Tax.
Yes, you need to register under GST once you cross the threshold limit of Rs. 20 Lakhs.
If your services are export-oriented and you receive foreign currency as consideration for the same, you can supply these services under LUT and no GST would be charged on your supplies.
It is advisable to hire a practicing CA for overall Income Tax and GST compliances to avoid levy of any penalty for default or delay in compliances and proper consultation.
We have a few clients working on the same export services model and receiving payment through Paypal, Payoneer, Transferwise, etc. We can help you with all the compliances under Income Tax and GST.
I hope that this answer satisfies your requirements.
Regards,
CA Hunny Badlani
For individuals claiming his income under Presumptive Taxation(Sec. 44AD/ADA), advance tax is to be paid in full in the month of March.
For complete advance tax calculation, advisable to use the services of a practicing CA.