• Need help choosing between Professional Consultant vs Salaried Employee

I have got a job offer that allows me to join either as a professional consultant to optimize my taxes or as a salaried employee. The base salary (25L) and bonuses (3L) combined come to about 28 Lakhs per annum. Now, I am looking for some help to decide if I should join as a professional consultant or as a salaried employee. Which one would be better in terms of reducing my overall tax liability and what taxes should I be paying if I decide to join as a consultant?
Asked 8 months ago in Income Tax

If you are paying as consultant then you can go presumptive taxation under income tax rules and also liable for GST. 

Whereas for salary income, income tax need to be paid as per applicable slab rates. 

Detailed calculation can be done after getting exact figure 

Vidya Jain
CA, Kolkata
974 Answers
58 Consultations

4.8 on 5.0

- Opt for professional consultant. GTI before deductions u/s 80 will be Rs. 14 lacs and taxable income would be Rs. 11.50 lacs (assuming investment of Rs.2.50 lacs). Tax liability under old regime would be Rs.1,63,800. Tax liability under new regime would be Rs. 1,69,000. TDS @10% would be deductible by the payer i.e. Rs.2,80,000. Entire tax liability would be covered by TDS deductible by the company.

- As the gross receipts is more than Rs. 20 lacs you are liable to pay GST@18%. You have to issue proper invoice to the client on monthly basis. Also draft a proper agreement with the company. 

- If the amount of GST is included in Rs. 28 lacs then we have to check the calculations whether you should go with consultant or salaried.

 

For detailed discussion you may opt for phone consultation.

Vivek Kumar Arora
CA, Delhi
4493 Answers
619 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

Since you are a professional, you can opt for presumptive taxation under section 44ADA declaring 50% of gross receipts as profit.

 

It is advisable to take the benefit of presumptive taxation scheme u/s 44ada.

 

We may assist you in entire procedure.

Payal Chhajed
CA, Mumbai
5175 Answers
244 Consultations

5.0 on 5.0

This can depend on various factors:

1. If you consider income tax you'll obviously save tax but

2. Since your pay would be above Rs. 20 lakh you will be liable to GST so will the client or company repay you GST?

Because that would cost you around 5 lakh

Considering GST if company doesn't reimburse that then being a salaried employee would be more beneficial and secure.

 

We can have a phone consultation to discuss more on same.

 

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
4065 Answers
70 Consultations

5.0 on 5.0

Hii

 

As you had mentioned you have 2 option my opinions on both are as under 

 

1 salary- in salary certain allowances are available to minimise income tax, but in salary we can’t claim any expenses 

 

2 consultant - in this you can claim all your expenses related to your profession as exp and net (income -expenses) will be your income and tax applicable on this net 

 

 

 

 

 

Lalit Bansal
CA, Delhi
756 Answers
59 Consultations

5.0 on 5.0

Joining as consultant will be better as TDS of 10% will be deducted as you can file your ITR in presumptive scheme claiming 50% of earnings as income.

Ruchi Goel Anchal
CA, Gurgaon
505 Answers
12 Consultations

5.0 on 5.0

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