Hi, I am a digital marketing expert. I provide services like managing Google Ads, Facebook Ads, and Social Media Marketing for my clients. For one of the clients, I was hired as an independent contractor (via a third-party Freelance website) For others there is no contract. I send the invoice via PayPal and get money into my bank account. Is this considered business or profession for tax purposes. More specifically, should I file tax under 44AD or 44 ADA?
Hi,
You can opt for code 16019 or 21008 which are a part of section 44AD (business).
Please make sure that under section 44AD , the turnover limit allowed is upto 2cr. As such, once your gross receipts in a financial year exceeds the given limit you cannot opt for this section 44AD while filing tax return.
Thanks
Damini
- Whether you are providing service, doing trading of goods or involved in manufacturing, all are treated as business except specified professions mentioned u/s 44AA(1). It is a non-specified profession. You are eligible to claim section 44AD.
- If turnover exceeds Rs. 20 lacs then GST registration is mandatory. Open current account for business transactions. If you are providing services to foreign clients then it is an export of services. In such case you can export without payment of tax subject to fulfillment of certain conditions in GST. Obtain IEC code.
Hello Sir,
You will be covered u/s 44AD from Income tax perspective. This work will be covered under business as only professionals are covered u/s 44ADA and this work is not covered under professional services. You have the option to opt for presumptive tax u/s 44AD and you can show the profit of 6% (Bank Turnover)/8% (Cash Turnover) as the case may be.
It will be considered as business and you need to file it under 44AD.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Hello,
Your profession is not under the specified list of professions u/s. 44AA that are eligible for Sec. 44ADA Presumptive Taxation for Professionals. Therefore, it would be regarded as a business and would be eligible for Sec. 44AD Presumptive Taxation for Businesses.
Further, If your total receipts from such supply of services exceed Rs. 20 LAkhs in an F.Y., you would be required to get registered under GST. For the supply of services to foreign clients, if it qualifies the definition of export services under GST, then these services can be provided without payment of GST by filing LUT under GST.
I hope this answer satisfies your requirements. For a detailed resolution of your query, you can contact us directly at badlaniassociates at Gmail or take a phone consultation.
Regards,
CA Hunny Badlani
Badlani & Associates
Further, If revenue cross over INR 50 Lac for the year and profit margin hovers around 70%. In that case, can I declare a profit of just 8% or do I have to show a complete 70% and pay taxes on that (Under 44AD)? None of My clients are from India, all of them are from the U.S. or Canada. In this case of export of services, do I have to register and file GST or I am exempt from doing so. And, do I need to get any IEC code/certificate?
Yes, you can declare profit at 6% on bank turnover amd 8% on Cash turnover. Also you are not required to maintain books of Accounts in this case. You just need to give information of Cash Balance, Debtors & Creditors while filing Return of Income.
For GST, you need to take registration if your turnover crosses the prescribed limit (40 Lacs.). Even when it is export, you need to take registration as exports are not excluded from Registration. In addition to this, you also need to have IEC.
- Minimum you have to show 6% or 8%.
- If turnover exceeds Rs. 20 lacs then GST registration is mandatory.
- Yes obtain IEC code.
I will assist you in getting above registrations.
Hello,
As per Sec. 44AD, you will have to declare at least 6% (Bank Receipts) / 8% (Cash Receipts) of the turnover.
GST Registration would be mandatory in case receipts exceed Rs. 20 Lakhs mark.
IEC should be obtained.
I hope this answer satisfies your requirements. For a detailed resolution of your query or for any compliances, you can contact us directly at badlaniassociates at Gmail or take a phone consultation.
Regards,
CA Hunny Badlani
Badlani & Associates
Under 44AD you need to show actual profit or 8% whichever is higher.
Yes you have to register in gst