I am a retired Engineer from PSU and I do not get pension I was paid CPF on retirement which I have invested in Mutual fund and fixed deposits etc. If I take up consultancy work on consolidated monthly basis how will I have to pay Income tax can I claim income tax under 44ADA does that mean income from consultancy will be taken as 50% of payment I recieve from IIT (Indian Institute of Technology). please explain how to calculate my income tax liability.
Yes. You can claim presumptive taxation scheme of section 44ADA.
Under this, your income shall be deemed to be 50% of the gross receipts. No other expenses shall be allowable. Normal tax rates according to slabs shall apply for the 50% income so calculated.
The terms of your engagement is the criteria for determining whether you are an employee or a professional. If the tax is deducted @ 10% u/s 194 J, you are an independent professional and your income will be assessable under the head Profits and gains from business or profession. In such case you can opt for offering your income u/s 44ADA. 50% of the gross receipts (net of Service tax/GST, if any) needs to be offered as income from such consultancy services. There will not be any additional claim for expenditure. As you are most likely to be carrying on this consultancy service as a proprietor, your tax liability will depend upon the slab applicable to you. Thus if your income is between Rs 2.5 Lakhs to R 5 lakhs, it will be 10%, if it is between Rs 5-10 Lakhs, it will be 20%+Rs 25K and if it is above Rs 10 L, the tax will be @ 30% on the excess over 10L+Rs 1.25 L. In addition, you will have surcharge @ 3% on your income.
On the other hand, if you are treated as an employee, it becomes the responsibility of your employer to deduct tax as applicable to you.
Good Morning sir
Yes you can file your Itr under section 44ADA and can declare profit 50% or more Coz you are a professional as per income tax act 1961
Thanks for clear reply to my query. Further I would like your advice for this financial year(2017-18 Ay 2018-19) I retired in June 2017 and received pay for 3 months and leave en-cashment also I am already in 30% IT bracket, if I receive additional monthly consolidated consultancy say from November on-wards. How to calculate Income tax liability. I have some additional income from annuity purchase by me, FD interest and mutual funds also. I understand from AY 2019-2020 I can claim ITR under section 44ADA as clarified by yourself.
Hiii
For AY 2018-19 you have 3 types of income I) Salary - salary of 3 months and leave en cashment II) professional income III) income from other sources
thus for this year also you can use 44ADA for professional income and show other income in respective heads and no need of preparing Books of Accounts.
For AY 2018-19, you can use 44 ADA which would form part of your Income from Business & Profession.
You can show the salary income and other incomes in respective heads. Taxes shall be calculated according to the slabs.
You can use the presumptive taxation under section 44ADA whereby your income shall be deemed to be 50% of the gross receipts of your professional consultancy.
You can do this for AY 2018-19 also. 44ADA is for the head Business & Profession. Other incomes shall be showed in their respective heads.
Please feel free to revert/call in case you need more clarity.
Thanks and regards
Abhishek Dugar
CA CS B.com
For For AY 2018-19 you have 3 types of income I) Salary - salary of 3 months and leave en cashment II) professional income III) income from other sourceso I have to fill ITR-1 or some other form from For AY 2019-20 onwards I will you have 2 types of income I) professional income II) income from other sources in that case which ITR form is to be filled by me. please tell the correct ITR form for Ay 2018-19 and AY 2019-2020 onwards Thanks
ITR 1 will not be applicable now.
As per the current forms, you have to use ITR 3 for both the years. (unless any changes are done in future in the forms)
Sir,
Go for ITR 4
Hello,
You will have to file ITR - 4, which will take care of your salary income, other sources income as well as consultancy income.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
Hi,
For AY 2018-19, the forms are not yet notified. As of now, you can file ITR-4 which is the return for presumptive income.
All your sources on income can be considered in the same return.
Regards,
Keerthiga Padmanabhan
M.Com., CA, LL.B
