Sir,
It is suggested to open current account, however you can use saving account but it is advisable to keep proper records. You are liable for service tax under reverse charge ,mechanism.
I am a labour contractor. I take small contracts of doing labour work in construction line, then i hire unskilled labourers on daily wages to do the work. My annual turnover is of the tune 8-12Lacs with 4-5 payments of 2-3 lacs each. Earlier i used to do it all in cash. Now can i use my Saving bank account for taking payments and not get in the hassle of making(or registering) a firm and then opening a current account ? Do tax authorities have any concern with what type of bank account i use ? and will there be any additional tax liabilty on me, like sevice tax ?
Sir,
It is suggested to open current account, however you can use saving account but it is advisable to keep proper records. You are liable for service tax under reverse charge ,mechanism.
You can use savings bank account for your transactions. However, when the credits in savings bank exceed Rs 10 Lakhs in a financial year, you are likely to get notices from the Income Tax Department to explain sources of your deposits. In current account, there is no such issue. Current account can be opened in the name of individual also after showing your documents that you are carrying on the business as an individual.
You also need to check 26AS for TDS, if any, by your clients.
Further it is also possible that your clients may be collecting service tax from you under reverse charge mechanism.
If you are doing business as an individual, you will be taxed on your income slabs, i.e., exemption upto Rs. 2.5Lakhs, thereafter @ 10% upto Rs 5 Lakhs, then @ 20% upto Rs 10 Lakhs and 30% on income above Rs. 10 Lakhs. However, if you are having a partnership, you will be paying tax @ 30% on your entire income, after deducting interest on capital @ 12% p.a. and remuneration as per the limits specified under the Income Tax Act.
So for the kind of your turnover, there is no need for registering a firm and you can still operate with a Savings Bank account, even if you don't have a current account. However, if your turnover increases, then go for current account.
1. Saving account is for your savings not for business purpose , thus open a current account in your individual name and run your business
For current account in individual name no registration required only your kyc is sufficient same as in opening saving bank account
2. We are in 2nd half thus forgot receipts prior to 30 September , if by 31 march 2017 ur receipts cross 9 lakhs then u have to take registration in service tax, and above 10 lakhs u have to mandatory pay service tax even u not charge the same (but below 10 lakhs if u charge service tax from ur customers then you have to pay even below 10 lakhs)
3 if this year receipts below 10 lakhs then same 10 lakhs slab benifit we can enjoy in next year
Hope your queries solved now
Hello Sir,
You can very well do your transaction in Savings Bank Account unless your bank has a problem in you doing so.
Secondly Service Tax Liability shall arise only if your Turnover exceeds Rs.9 Lacs in one Financial Year.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Dear Sir,
You can use Savings Bank Account for your business. However, it is preferable to use current account because any cash deposits exceeding 10lacs in a year in a saving account attracts income tax inquiries.
Service Tax Liability shall arise only if your taxable turnover during the financial year exceeds INR 10 Lacs. Registration liability arises when turnover exceeds 9 lacs.
Thanks and Regards
Abhishek Dugar
CA CS B.com
Hi, you can continue your business using Savings Account. But it is always advisable to open a Current Account for business purposes.
You are liable to Register for Service Tax when the Turnover exceeds Rs. 9 Lakhs and you have to start collecting and Paying Service Tax when your Turnover exceeds Rs. 10 Lakhs
it is must to use current account for any business but it is not concern of income tax department.
No service tax liability if you are an individual, firm else registration is must if your income crosses Rs. 9 Lacs