Multiple Queries Regarding Income Tax as Blogger

Multiple Queries Regarding Income Tax as Blogger

I am Blogger, who work from Home, I would websites and I get paid for advertising & sometimes I get commission from the products i sale on my blogs.

So, I have multiple questions regarding this.

Question 1: - Which form i should use to fill my income Tax?

Question 2: - We are two partners in most of the blogs, but all the payments comes in my account, So, Do i need pay the tax of my other partner or I can send his share of income to his bank account by making a simple agreement/affidavit and then he can pay tax on his share of income, as this way we will get most benefits ?

How to split payments to get best benefit?

Question 3: - Can I buy a Car and get deduction as asset? Can you explain it for me like if I buy 5 Lakh Car, then how much deduction I will be allowed each year?

Question 4: - How to prepare the income statement like do I need to mention all the transactions in the statement or I just need to show the total expense of certain things.

For Example:- I have purchased domains & hosting worth 1 Lakh, so can i just write like this way :- Domain & Hosting Purchase :- 100,000 INR ?

Or Do I need to explain it in brief?

Question 5: - My payment comes in foreign Currency, so do I need to mention income in "INCOME Statement" in foreign currency? or i can do it in "INR"? But I have payments proof receipts in "USD".

Question 6: - As I work from Home, so can i deduct home Electricity Bill Charges?

Question 7: - How much maximum i can save in total...for example, If I earn 15 Lakh/Year, then after saving 1.5 lakh (under 80c), and deducting 1.5 lakh expenses, How much tax I need to pay?

Is there any way to save more like by buying assets or any other way?

Question 8: - Can i invest in Bank PPF accounts to save 1.5 Lakh under section 80c?

Question 9: - Do I need print outs of all the expenses & Incoming payments? Do income tax department really ask for it?

Question 10: - Do i need to attach payment proofs and expenses Proofs with Income tax return form?

Question 11: - Can I pay all the tax in 1st week of March after total calculation of the financial Year? Or do I need to pay advance Tax?

Asked 7 years ago in Income Tax

Dear Sir

1. You should file ITR 4.

2.Better you open a new bank account and receive all payment in that bank account. However, you can use the option suggested by you if you think opening new bank account and getting payment in that is not feasible. Please prepare a partnership deed.

3. Yes, you are allowed to take depreciation. 15% of the book value can be claimed as depreciation each year. If you are using car for business as well as personal purpose. You will be allowed proportionate depreciation.

4.example given by you is correct. No need to explain it in brief.

5. You should prepare account statement in INR.

6.yes, you can deduct proportionate exp.

7. You can deduct all your business exp.

8.yes, you can.

9. Generally, they don't ask. But they can ask in case your case selected for scrutiny.

10.No

11. If your total tax payable during the year is more than 10000.

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar

CA, Mumbai

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Hi.

As you are in partnership, you can have partnership agreement/deed prepare, and get it registered.

1) in partnership you have to file ITR 5, in partnership , your friend any easily proof the source of income and

whatever the profit you received from partnership firm after tax is not taxable in the hands of the partner.

2) it is better to open a current account where all the business income comes in and it is beneficial/ manadatory to maintain separate bank account for professional and personal income and expense.

3) yes, you can have assets to run a profession/ business , it will be proportionately charge to your business income depending its use in profession and personal usage.

4) it is important to have all the account properly maintain, in case any scrutiny comes up. you need to maintain document proof for all the expenses and income.

if you are eligible to opt for presumptive tax under section 44AD, then there is no need to maintain books of account. and your income from your business would be assume to be 8% of gross total income. assuming all the expenses being taken care of.

if your expenses are less you can opt for this section.

5) yes your are required to.

6) yes, you can deduct proportionately.

7) if you are filing return in individual capacity then you need to file ITR 4, and can claim 1.5 lac deduction under section 80 c,. and after including all other income from different sources, you need to calculate tax liability.

again i would suggest if there is partner you better go for partnership and file return as partnership, tax rate for partnership is 30%

it will be difficult for your partner to prove the source of income which you will transfer to him, if otherwise you are giving him as salary or consultant (after taking care of TDS amount, PT, any other statutory liability)

8) depending on the option you choose (yes , you can claim deduction under 80c by investing whole amount in PPF)

9) as told above it is better to keep all the expense and income document in record atleast for 8 financial years.

10) there is no need to attach document proof with ITR.

11) you are suppose to pay advance tax as given below

Advance Tax : Installments & Due Dates w.e.f. 01.04.2016 for all assessees

Due Date Advance Tax Installment Amount

15th June At least 15% of Tax on total income for the year.

15th September At least 45% of Tax on total income for the year less advance tax already paid.

15th December At least 75% of Tax on total income for the year less advance tax already paid.

15th March 100% of Tax on total income for the year less advance tax already paid.

for any further query you can also reach me at agarwalvishakha23@gmail.com

Vishakha Agarwal

CA, Bangalore

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I have some Doubts...

1. If I opt for Section 44AD and pay tax of all the income ( including my partners share also) and then send him his payment after tax payment, will he need to explain why he got that payment from me?

2. As I am a blogger / Webmaster / Affiliate Marketer, so isn't it professional field? and for professionals presumptive Tax is "50%" ? or I can go with regular 8% ?

3. In case I opt for regular Tax paying by maintaining books and records, & by paying my partner his income share by making a "FREELANCE WRITER AGREEMENT" where i can pay him his money as salary? will that be Okay? And then he can fill his income tax on his salary later on?

Do Suggest which one is better "Section 44 AD" or "Regular Tax Scheme" as our investment is low.

For Example in total ( me and my partner) earning 30 Lakh/year, but investment is around 2 Lakh only, so do suggest which way to pay Tax will be beneficial for both so us?

Asked 7 years ago

hi,

yes, then your income falls under professional, you can go for 44ada if your gross income doesnt exceeds rs 50 lakhs in a year,

there are few limitation and conditions you need to look at before opting for 44ada, here is a link

http://taxguru.in/income-tax/section-44ada-presumptive-tax-scheme-professionals.html

yes, he needs to explain the source of income, if his share is more then taxable income then you need to deduct TDS ( as employee/ consultant). so, if you are transferring his share then after paying tax then its amount to profit sharing of income, which falls under partnership, then firm will pay the tax, and no tax need to be paid by partners on their profit recd from the income.

you can still pay TDS on your partner income-as salary ( sec 192 income tax slab)or consultant (sec 194 j @10%)

and you need to file return as proprietorship.

if your expenses are less then 50% then you can opt for 44ADA. but i would suggest still you better maintain all accounts . under 44ada also you are required to pay advance tax as mentioned in my previous reply.

Vishakha Agarwal

CA, Bangalore

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One Last Question :- If I am showing 18 Lakh as total Gross Receipt (gross income), then according to section 44ADA, 9 LAKH will be taxable.

Then will I be able to get 2.5 LAKH relaxation ? and have to calculate tax on rest 6.5 Lakh?

or will need to pay tax on full 9 lakh?

Asked 7 years ago

Hi,

As per section 44ada,

your income will be 9 lakhs and you are eligible for deduction under various sections , you are liable to pay tax on the net income after considering deductions. you need to pay tax as per tax slabs.

Vishakha Agarwal

CA, Bangalore

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You will be able to get relaxation of 2.5 lacs and tax will be calculated in balance 6.5 lacs.

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar

CA, Mumbai

3576 Answers

183 Consultations

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yes Basic Exemption limit is available and even if you can take benefits of saving which fall in Section 80C( like LIC, Tax Saving FD etc.), 80D ( Medical Insurance your or your parents , preventive health checkup up to Rs. 5000) 80GG if you live in rented house up to Rs. 60000 if you ( if you invest in above mentioned).