I work as a consultant providing research services for a US based company (actually a University). I receive payments on a bimonthly basis. Please answer the following questions. 1) How much income tax (i.e., percentage) should I pay? 2) Are service tax and advance tax applicable to me? (I assume NO) 3) When I should I pay the tax? (At the end of year while filing tax returns? or During the year at some regular intervals?) 4) I assume I can opt for Presumptive Taxation Scheme. Please confirm.
Hi
You may opt for presumptive taxation.
Advance tax shall be payable in the month of March 21 for FY 20-21.
Tax rate would be according to slabs rates.
You need to register under GST once your turnover crosses 20 lacs. Post registration there won't be any charge/payment of GST since you are exporting services; return filing shall become mandatory.
Dear Sir,
Hope you are doing well !1
1. You need to pay taxes as per applicable slab rate.
Taxable income
Tax Rate
(Existing Scheme)
Tax Rate
(New Scheme)
Up to Rs. 2,50,000
Nil
Nil
Rs. 2,50,001 to Rs. 5,00,000
5%
5%
Rs. 5,00,001 to Rs. 7,50,000
20%
10%
Rs. 7,50,001 to Rs. 10,00,000
20%
15%
Rs. 10,00,001 to Rs. 12,50,000
30%
20%
Rs. 12,50,001 to Rs. 15,00,000
30%
25%
Above Rs. 15,00,000
30%
30%
2.If the tax liability of a freelancer (you) does not exceed more than Rs.10,000 for a financial year, you need not pay taxes .
If a freelancer (you) fails to pay advance tax, then he/she is liable to pay interests mentioned Under Section 234B and Section 234C.
3.If the tax due exceeds Rs.10,000, you are required to pay advance tax by the following due dates.
Due date for Advance Tax
On or before 15th June
Not less than 15% of advance tax
On or before 15th September
Not less than 45% of advance tax as reduced by the tax paid in the last installment.
On or before 15th December
Not less than 75% of advance tax as reduced by the tax paid till the last installments.
On or before 15th March
The whole amount (100%) of advance tax as reduced by the tax paid till the last installments.
4. Yes, you can take the benefits of presumptive taxation scheme u/s 44ADA.
We may assist you in entire calculation & ITR filings.
It is advisable to take a phone consultation for detailed discussion.
Hello,
1. Income would be payable as per slab rates applicable to you.
2. Advance Tax would be applicable if the income tax liability is more than Rs. 10,000 for a F.Y.
3. If advance tax provisions are applicable to you, the tax would be payable at regular intervals. However, if advance tax provisions are not applicable, the tax would be payable at the time of filing of return.
4. Yes, you can opt for the Presumptive Taxation Scheme.
I hope this answer satisfies your requirements.
Regards,
CA Hunny Badlani
1. There is no fix percentage for Income Tax it is Slab wise
0 to 2.5 Lakh NIL
2.5 to 5 Lakh 5%
5 to 10 Lakh 20%
More Than 10 Lakh It is 30%
Over and above 4% Education Cess will be applicable on Income Tax Amount.
2. GST rate is 0% on export of service however you need to take GST Registration.
3. Income Tax need to be paid Quarterly as Advance Tax on 15tn Day of last Month of the quarter.
4. You can opt for Presumptive taxation and in that case Advance Tax need to be Paid on 15th March Only no need to pay in first 3 quarters.
If you have no other income you can opt for presumptive taxation scheme and declare 50% of income as taxable. If the tax on that income exceeds 10000 in a FY you have to pay advance tax by 15th March 2021.
Income Tax will be applicable at the slab rates.
Service tax will not be applicable to you.
Hi
1. Income tax will be applicable as per slab rate. Or you can opt for presumptive taxation.
2. Advance tax is requires to pay
The person liable to pay advance tax: If total tax payable in a financial year is Rs. 10000 or more, then a person has to pay advance tax. All the tax payers are covered by the advance tax.
Gst registration is required once your turnover cross 20 lakh.
Advance Tax Due Dates
Advance Tax Payable*
On or before 15th June
15%
On or before 15th September
45%
On or before 15th December
75%
On or before 15th March
100%
Thank you everyone for the responses. However, I request you to please clarify the below queries which arose in relation to the answers I got here. 1) I read somewhere that for a consultant tax rate will be 10% flat. Is it that since I am being paid from US, my tax rate will come under slab rates? (Please clear this confusion) 2) I will be paid in Dollar currency to my Indian bank account. Do I still need to do GST registration even if GST rate is 0 as I am exporting services?
1, It's tds rate.
You need to pay the taxes as per applicable slab rate while ITR.
2.You would be required to get GST registration only if your turnover/receipts crosses the limit of RS 20 lakh.
Also, after getting GST registration, You won't be required to pay any GST provided you would be having LUT for export of services.
First, to apply for LUT for a F.Y. and then supply services without payment of IGST on such services.
Second, supply such services with payment of IGST at 18% without LUT and then later claim the refund of such IGST paid.
It is advisable to take a phone consultation for detailed discussion.
We may assist you in entire procedure.
Hi,
1. No, there is no such thing as 10% flat tax rate for consultants.
2. Yes, you need to take gst registration once your turnover exceed INR 20 lacs. You are eligible for zero gst gate only after registration and getting LUT.
Hi
1. It is rate of TDS you need pay income tax as per slab rate applicable to you.
2. Yes you will require gst registration if turnover cross 20 lakh Even if zero rated services.
Here you two options
Option 1 Supply goods or services, or both, under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax, and then claim a refund of unutilised input tax credit
Option 2: Any exporter or United Nations or Embassy or other agencies/bodies as specified in section 55 who supplies goods or services, or both, after fulfilling certain conditions, safeguards and procedures as may be prescribed; and paying the IGST, can claim refund of such tax paid on the supplied goods or services, or both. The applicant has to apply for the refund as per the conditions specified under section 54 of the CGST Act.
1. 10% is the TDS rate. Net income tax liability would be as per the slab rates.
2. GST Registration would be required if the gross receipts exceed the threshold of Rs. 20 Lakhs. You can supply such export services without payment of IGST under LUT. However, return filing compliances would be required.
Thank you for the responses. Please answer a few more queries below. 1) I need to raise an invoice for remittance. I assume IEC (Import-Export Code) is not required for me as I am providing non-commercial services. Please confirm. That is, if I just provide my bank details to the paying party, can I expect remittance to be deposited in my account? 2) Can a Purchase Order serve as Service Agreement with the party? 3) Should there be a place in the invoice for my Signature authorizing it? If yes, Can I paste my signature image? (I hope taking printout and scanning may reduce quality)
Hey,
1.IEC is a little grey area for service providers. Practically, its better to take IEC as its not a big deal and no further compliances are required. Even if you don't take IEC, you can get the money in your bank account.
2. It doesn't serve as agreement but its good enough document.
3. No, ideally image should not be pasted.
Income tax would depend on your income and expense.
Yes GST and Advance tax would be applicable if it crosses a threshold i.e. 20 lakh and 10,000 respectively.
During the year at regular interval if amount is huge.
Yes you can but we need to figure out under which presumptive scheme you would fall out of 44AD and 44ADA.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
That is the TDS tax rate and not income tax.
Yes you have to register for GST and not necessarily pay it.
IEC code is required in case of service only when you wish to take benefit of SEIS.
Yes you can paste your signature image.
1) IEC Code is not mandatory for export of services. You can get the remittance without that also.
2) Purchase Order will not serve as service agreement with the party. You should have the service agreement.
3) Signature is not mandatory as usually soft copy of invoices is shared over the mail. Mail also serves the purpose.
Hi
1. Yes you understand is correct.
2. No
3. Yes you can do so.
1. Yes, IEC is not mandatory for that.
2.Yes, it may but it advisable to have a service agreement as well.
3. Yes, you can do so.
1) My payment will exceed 20 Lakh only after a few months (6-7). Is it OK if I do GST registration just around that month? When exactly I can do that at the latest? 2) What are the GST forms (like GSTR1, GST-3B etc.) that I need to file returns? 3) For presumptive taxation, will I come under 44AD or 44ADA? (for information, I provide research services to a university).
1. You need to register under GST within 30 days of crossing the threshold of 20 lacs.
2. GSTR 3B monthly, GSTR 1 quarterly and GSTR 9 annually.
3. You are eligible for 44ADA.
1. You have to take GST registration irrespective of the amount in case of export of service. so from the first bill you must have GST Number and shall file LUT online to taxed @0% otherwise you need to pay 18% GST and claim refund.
2. You meed to file GSTR 1 and GSTR 3B monthly and GSTR 9 Annually
3. For presumptive taxation you can use 44ADA.
Yes you can do GST registration around that month.
Initially just GSTR 1 and GSTR 3B
I think it will be covered under 44AD.
As 44ADA mainly includes consultancy.
1. Within 30 days of crossing the threshold limit of Rs. 20 Lakhs.
2. GSTR-3B, GSTR-1, and GSTR-9.
3. Sec. 44ADA.
Hi
1. You need to get registered within 30 days of crossing limit.
2. You need to file GSTR 1 quarterly GSTR 3B Monthly GSTR 9 annually.
3. You can take benefit of section 44ADA.
Dear Sir,
Hope you are doing well !!
1. A person should apply for GST Registration within 30 days from the date on which he became liable to register for GST.
2.All registered persons under GST are required to file various returns. Main returns to be filed are GSTR-3B (which is a monthly summary) and GSTR 1 (details of outward supplies).
Finally, an annual GST return GSTR 9 must be filed by all GST registered entities on/before the 31st of December.
3.You can take the benefit of presumptive taxation scheme u/s 44ADA.
Presumptive taxation scheme (PTS) allows you to calculate your tax on an estimated income or profit.
Professionals who are governed or regulated by an institute or body such as doctors, lawyers, architects, interior designers and others can adopt PTS. For them, 50% of the total receipts during the fiscal will be considered as profit and get taxed accordingly. A professional can voluntarily declare the income at a higher rate than mandatory 50% of the total receipts.
We may assist you in ITR filings & entire procedure.
If you fall under specified profession u/s 44AA & gross receipt < 50 lac then opt 44ADA with 50% assumed profit.
within 30 days from which you liable to pay tax under GST
GSTR -1 quarterly & GSTR 3B might be Nill in your case monthly
Just to recap my background, I work as a consultant providing research services for a US based company (actually a University). You mentioned in one of my queries above that a service agreement is required for me. I don't have a service agreement. Please answer my below queries in relation to this. 1) I have an offer letter kind of a document which has billing structure, payment terms, signatures of both the parties involved, description of services to be provided, start date and end date of services. Please let me know if this can serve as a service agreement? Or shall I request them for a service agreement also? 2) What exactly is a service agreement required for me?
Yes, that would suffice the requirements of a service agreement.
We may further review it to discuss the pros and cons of not having a complete service agreement.
Yes, this can serve as a service agreement.
I don't think there is any specific requirement of service agreement. Your invoice and their acceptance of same by making payment would be enough.
Hi
Yes this is sufficient.
No specific requirements for service agreement.
Yes, that would be sufficient.