Advise needed for a student internet entreprenuer
I am doing my graduation and receives 12.4K INR as stipend from MHRD.
I build websites, make money from it and sell the website .
I receive money from abroad, Amazon US, UK, and Canada
From 2015 April on wards till the date I have made around 20 Lakh from website in come, 39 Lakh from selling the website around 2 lack from bank interest, around 1 Lack from stipend.
I work with freelancers and online companies , if they are Indian, transactions are done via Bank NEFT if not transactions are via Paypal. From 2015 April- Now I have spent around 7 lakh on website related services. There is only e-copy of the bills are available, that is from paypal.
I don't own a company
1) How much do I have to pay for the income i received from selling the sites- my clients are not India
2)How can I save on Tax, I don't have fixed deposit, or any other deposits or I down't own any assets other than my websites
3)Is e-copies are okay for tax filing?
Asked 2 years ago in Income Tax from Mumbai, Maharashtra
Congrats for being a successful student entrepreneur.
Building websites, providing services and selling web sites are business activities for you. Hence, income from such activities will be assessed under the head : "Income from business or profession".
As you don't own a company, the entire income is perhaps received by you in your name. It is a proprietary business for you. As the services are rendered by you from India, the services rendered to clients abroad are considered to be export of your services and are taxable in India. If you have to pay any taxes abroad, you can claim tax credit under DTAA (Double Taxation Avoidance Agreements) with such countries.
All reasonable expenses attributable to your business can be claimed as deduction from your business income. Apart from this, you can claim deductions u/s 80C, 80D and likewise.
You need to maintain books of account, which include cash and bank books and ledgers. You can maintain your books on computer system and e copies of invoices are ok.
It is a great work that you are doing being a Student.Keep up the great work.
1. Considering the quantum of work you have done, you will be taxed @ 30% on the amount of profits that you make at the year end. i.e All Income Less Expenditure in context of business.
2. To save up on taxes you can invest upto Rs.150,000/- under section 80C, options for which are Life Insurance, Pension Schemes, PPF, ELSS, etc - Please consult an investment advisor before making these investments or you can consult any of us, but do not fall prey to agents who have flooded the market who may misguide you and sell you wrong products.
You can also buy a medical insurance for you and your family under section 80D and claim the benefits of the same.
3. Yes E-Copies are OK for Tax Filing but you will have to preserve them for a period of next 8 years even after filing your returns.
Wish you have a great future ahead.
Feel free for any further clarifications.
CA Rohit R Sharma
BCOM, CA, LLB-GEN, FAFP.
With respect to your quarry please find below details for your reference :
1. Total Income Tax shall be payable on income of Rs. 61 Lacs (20 Lakh from website in come, 39 Lakh from selling the website around 2 lack from bank interest). Total Tax Liability on the same shall be Rs. 17,04,650/- (Approx. Subject to TDS & Non payment of Advance Tax, Investment Value)
2. There can be various ways to save tax like investment, Tax Planning through investment, Based on your income model other options can also be work out. We need to structure the transaction in such manner so that we can minimize the tax liability at your end.
3. E - Copies are perfectly fine for tax filing purpose.
As per your data, you are having income from different heads such as business income , Other Sources income.
For Business Income you can claim expenses done for the purpose of business.
You can show it as proprietor income and claim benefits available to Individuals.
Major deductions you can claim are 80TTA, 80C.
It is advised to make some investments and claim their benefits too.
For any query/clarification, feel free to contact at firstname.lastname@example.org