Income tax and GST for freelancers

Assuming he is doing under sole proprietorship business, he will have to pay income tax on net income (income less related business expenses) at the tax slab prescribed as per new rate scheme or old rate (depends on what he opted) . There is no seperate tax slab for freelancer. He can opt for 44ADA if it involves specialization and qualification. 

2. advance tax in such cases can be paid in the last quarter I.e 31 st March only if the estimated tax liability exceeds 10000

3.yes its required if overseas clients are there. The rate is 18%. But the nature of work needs to be discussed in detail before providing the specific rate. 

Hi

For Income tax, income tax shall be paid at the time of return filing for the relevant FY. If the annual tax is more than 10k advance tax provisions shall apply.

He may opt for presumptive taxation under section 44ADA provided he is an eligible professional as specified under section 44AA. Under section 44ADA, 50% of gross receipts in considered as taxable and no other deductions for expenses is allowed.

If opting for 44ADA, advance tax shall be payabe in the month of March only. If not opting, advance tax shall be payable in 4 installments - June, Sep, Dec and March.

Taxation shall be at normal slab rates.

GST registration shall be required if turnover is more than 20 lakhs. Once registration is obtained, he may file Letter of Undertaking and export services without payment of IGST. GST is not to be charged in case of export of services.

Feel free to reach out in case of any clarification.

Tax needs to be paid after end of each financial year I.e. 31st March.

Amount of tax would depend on amount of income expense.

No separate slab for freelancer it is same as normal individual.

Advance tax depends on amount of tax liability.

GST depends on amount of total receipt.

It would be better if you take phone consultation so that we can discuss and plan tax in detail.

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

Thank you

Dear Sir

Hope you are doing well !!

He needs to pay income tax as per applicable slab rate at the time of filing return provide he'll not liable to pay any advance tax.

Sec 44 ADA is a pretty attractive section for freelancers.

It will basically assume 50% of gross receipts as Gross total income:

Eg: his total receipts will be 12 lakh then he needs to pay tax only on 6 lakh.

(~12 l x 50% = 6 L in).

Also, he can still avail deductions under section 80C-U, so this might further reduce his taxable income. He needs to pay tax on Rs ~6L if he doesn't not have any other deductions.

On availing this section,  he would not be required to maintain any accounting records

He would be required to get GST registration only if his turnover crosses the limit of RS 20 lakh.

Also, after getting GST registration, je won't be required to pay any gst provided he would be having LUT for export of services.

It is advisable to take a phone consultation for detailed discussion.

We may assist you in entire procedure.

Hi

For income tax purposes you have two options

Either to use normal slab rate or you can take benefit undersection 44ADA. 

Under section 44ADA  a scheme of presumptive taxation of profits and gains arising from professions mentioned under Section 44AA(1) of the Income Tax Act, 1961. The benefit of section 44ADA can be taken only by specified professionals whose annual gross receipts are under Rs 50 lakh.

For payment of tax if you avail the option of 44ada you need advance tax in month of March. Otherwise in normal you need pay in 4 installment in June September December March.

Gst registration required once your turnover cross 20 lakhs.after gst registration  you can apply LUT. Export without paying gst.

Hello,

1. Income Tax would be payable on the net income from the profession. There is no different tax slab for freelancers. 

2. Advance Tax liability would arise in case the tax liability is more than Rs. 10,000 for an F.Y. 

3. GST registration would be required if the gross receipts cross the threshold limit of Rs. 20 Lakhs. For export services, against which foreign currency is received, LUT can be applied after registration for the supply of services without payment of GST.

I hope this answer satisfies your requirements.

Regards,

CA Hunny Badlani

1. The slab rate is same as for individuals. He can file his return under presumptive scheme if his receipts is below   50 lacs. wherein 50% of his income will be taxable. No other expense deduction can be claimed.

2. If tax liability exceeds 10000 advance tax is required to be paid by 15th March 2021.

3. He is required to take GST registration if his turnover exceeds 20 lacs. GST will be applicable at 18%.

1. 44ADA shall be eligible professionals working in for legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration.

2. Yes, tax needs to be paid for the FY 20-21 by 15 march 21 after considering entire income for the year and projected income for remaining 15 days. If tax paid is more, refund shall be granted after filing ITR. If tax paid is less, additional tax shall have to be paid as self assessment tax before filing ITR.

3. Since you are exporting services and receiving the consideration in foreign currency, GST shall not be charged to the foreign clients.

4. The threshold of 20 lacs shall be available. Only once you cross this threshold, you need to register under GST and file returns accordingly. If conditions for zero rated supply are fulfilled, there would be no requirement of charging or paying GST. Only return filing shall have to be done for reporting and compliance.

1. Sec. 44ADA is available for specified professionals only. Legal, Medical, Engineering, Architecture, Accountancy, Technical consultancy, Interior decoration, Other notified professionals - Authorized representatives, Film Artists, Certain sports-related persons, Company Secretaries, and Information technology.

2. Yes, the full-year tax on the estimated income basis is to be paid. It is calculated on estimated income for the year. The excess advance tax would be refunded on the filing of the income tax return.

3. If qualified as Export Services, services to foreign nationals could be provided without payment of GST under LUT.

4. GST registration and compliances are required only on the crossing of the threshold of Rs. 20 Lakhs. If the annual gross receipts are Rs. 5 Lakhs, No GST registration is required and no need to charge GST.

Hi

Eligible professionals under Section 44ADA

Professionals engaged in the following professions are eligible:

• Interior decorations
• Technical consulting
• Engineering
• Accounting
• Legal
• Medical
• Architecture
• Other professionals, as mentioned below:

   

a. Movie artists includes a producer, editor, actor, director, music director, art director, dance director, cameraman, singer, lyricist, story writer, screenplay or dialogue writer and costume designers

b. Authorised representative means a person who represents another person for a fee before a tribunal or any authority constituted under any law. It does not include an employee of the person so represented or a person who is carrying on the profession of accountancy

c. Any other notified professionals.

2.Any person opting for the presumptive taxation scheme under section 44ADA is liable to pay whole amount of advance tax on or before 1 5th March of the previous year. If he fails to pay the advance tax by 15th March of previous year, he shall be liable to pay interest as per section 234C

3. You no need to charge GST as you exporting services.

4. GST registration is required when turnover cross 20 lacs. In case of zero rated services no need to pay GST only return & other complanice is required.

Section 44ADA can be opted for the profession listed in 44ADA and not by any freelancer.

One need to hire CA he will help you in calculating.

If you pay in excess you will get refund.

There is a way out for that we can discuss that over call.

No gst is applicable only if earning above 20 lakh this 20 lakh limit is only not applicable when he is providing this service via any website registered in India.

1. 44ADA is applicable to certain specified professions like legal, engineering, technical consultancy etc.

2. Advance tax will be deposited before 15th March 2021 if the tax liability for the year exceeds 10000. It is to be calculated on estimated tax. If excess tax is paid it can be claimed as refund when filing the return.

3. He will be required to take registration if the threshold exceeds. If the remittance is received in foreign currency he will be covered in export of service and GST will be nil rated. He will have to file LUT (online declaration) on GST portal and no GST will need to be charged on the amount. If any services are rendered to Indian clients also it will be included in total turnover.

Hello sir

advance tax provisions will apply only when tax is more then 10 k

 There is no seperate slab for freelancer

 u can go for section 44ADA where 50% of gross receipt is considered as income liable for tax.

GST registration shall be required if turnover is more than 20 lakhs.
Since he give service out of india so he can apply for LUT  through which he dont need to charge gst on export invoices.

Dear sir

it is advisable to take phone consultation for further doubt.

Dear Sir,

Hope you are dong well !!

1. The following are the professionals, who are eligible to opt for Presumptive Taxation Scheme under Section 44ADA:

• 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

2.Taxpayers covered u/s 44AD and 44ADA need to pay Advance Tax of the whole amount in one installment on or before the 15th March of the financial year. An option has been given to section 44AD taxpayers to pay their Advance Tax due by 31st March.

Advance Tax liability for taxpayers covered under section 44AD and 44ADA of the Income Tax Act, 1961

Due Date

Installment Payable

On or before 15th Jun, 2018

 —

On or before 15th Sep, 2018

 —

On or before 15th Dec, 2018

 —

On or before 15th Mar, 2019

 The whole amount (100%) of Advance Tax 

3.Since it is export of services where consideration is received in foreign currency, it will not be chargeable to GST.

4.Once his receipts exceeds 20 lacs, you will be liable to GST registration. Once registration is done, he can apply for LUT and export services without payment of taxes.

We may assist you with the entire process and compliances.