I expect an income of around 1.4 crores this year via Pvt. Ltd. Company. I want to transfer the total income to Sole Proprietorship Firm as an expense. I want to do that as I can exercise presumptive taxation (Section 44AD) on the income via Sole Proprietor Ship Firm. Also I will be paying a GST tax of 6% (composition scheme) from Sole Proprietorship Firm. Is this a legally valid way?
Under GST presumptive tax of 6% only allowed for turnover upto Rs. 50 Lacs
To claim 6% / 8% profit under income tax you need to show expenses so directly you can not go for expenses unless expenses are reasonable proved else you need to maintain books of accounts and show actual profit
Under presumptive taxation scheme, tax is payable on 6%/8% of gross receipts or actual profit percentage whichever is higher.
Composition scheme is applicable upto the turnover of Rs.50 lacs.
For detailed discussion you may opt for phone consultation
Diversion of income at source can be done if the transaction is properly structured and then there are no issues relating to corporate governance.
Is this going to be the total revenue of your company?
What expense are you going to show in your sole proprietorship?
If you are going to just show 8% profit without any expense from bank and your bank has all 1.4 crore it could create an issue.
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Thank you.
You can pay the expense which should be appropriate to the fair market value. The expense you can pay as remuneration or professional fees. Normally, you can claim 6% if the income does not fall as the professional fees.
Can I transfer just 50 Lakhs of the total amount to the Sole Proprietorship Firm (SPF) and then opt for Section 40AD? Also my expenses will be Nill for SPF. What is the right way to save tax via transfer of income to SPF utilizing section 40AD?
- What is the business of Private Ltd. Co.?
- Also what is the nature of services provided by you to Private Ltd. Co.?
- Are you also a Director in a Co.?
For detailed discussion you may opt for phone consultation
I would suggest if you can describe the business of the company and the role played by you.
Kindly opt for detailed consultantion
The income earned from Pvt Ltd Company can be either in the form of salary or can be treated as professional fees also.
Deduct TDS u/s 194J on the income(remuneration) from Pvt Ltd company.
You can do so by transferring to SPF and save taxes.
Sorry I am unable to understand your question.