Deductions available for professionals

1) All reasonable expenses incurred in connection with the earning of your professional income will be allowed as deduction in computing your taxable income. Your professional income will be assessed under the head : Income from Business/Profession. You will be able to claim deduction on account of depreciation on your assets employed in your profession, such as Laptops, Mobile, vehicle. The other expenses like travelling and conveyance to the extent they are not reimbursed by your firm/client can also be claimed. In addition regular expenses such as your expenditure on books, vehicle maintenance and communication expenses can also be claimed.

2) Your professional income will be subject to TDS @ 10%. After you claim the reasonable expenses as mentioned above and deductions available under Chapter VIA of the IT Act like 80C,you may not have taxable income upto your earnings upto Rs 5 Lakhs. Once your total income after all expenses and deductions exceed Rs. 5 Lakhs, you will get into 20% bracket. However you would have then TDS also to the extent of about Rs. 50K. After crossing the income limit of Rs. 10L, you will get into 30% slab. Here your TDS @ 10% will be short of your tax liability on income above Rs. 10L @ 30%. You will then have to pay advance Tax. This is only rough estimate.The exact workings depend upon your actual income, expenses and deductions.

3) You need to maintain accounts like cash book, bank statements and bills for your professional income to justify your incomes and expenses.

4) If your professional income exceeds Rs 25 L, then your accounts will have to be audited by a CA.

Since payments are deducted u/s Sec 194J @ 10%, you can claim all deduction of all official expenses incurred by you. Since TDS is already deducted and paid to govt account by your client, you donot have to pay advance tax again provided that your tax liability is already taken care of by TDS.

In case your gross receipts or fees collected by you, exceeds, Rs. 25 lakhs during the 1st Apr to 31st Mar period, you will be required to maintain books of accounts and get your books of accounts audited by a CA.

The replies are as under -

1. In computing the income which is chargeable to tax , all the expenses ( other than personal & capital expenses ) which has been genuinely and legitimately incurred for the purpose of earning the professional income should be allowed . In case of capital expenditure , which has been used for the purpose of your profession , depreciation will be allowed .

2. For the purpose of advance tax , section 208 of the Income tax mentioned that if your income chargeable to tax is 10000/- or more in a assessment year , then the assessee is liable to pay the advance tax .

3. Section 44AA mentions that a person engaged in the profession covering the legal profession , should maintain such book of account as notified by the CBDT and other all document which is required for the purpose of computation of Income .

4. If the Gross receipt exceeds Rs 25 lacs , then you have to get accounts audited by a CA.

Dear Sir,

Please find below all the answers :

(1) You can have deduction of all expenses incurred by you in the due course of your services like, travelling,

fuel, telephone, internet, depreciation on all capital goods used etc. against professional income received by

you.

(2) You have to pay advance tax at the total fees payable to you as a retainer i.e. net amount paid + TDS

deducted thereon.

(3) If you have total retainer ship income of more than Rs. 1,50,000/- than books of accounts required to

maintain.

(4) If your total receipts during the year is more than Rs. 25,00,000/- than you need to get your books of account

audited by CA