RECEIVED MONEY VIA PAYPAL AS A FREELANCER

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This query is : Resolved

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A freelancer received a significant sum via PayPal for engineering services provided by a group. The money was deposited into their personal account, and they are seeking guidance on filing their Income Tax Return (ITR). The discussion clarifies that ITR 4 with presumptive assessment is suitable, and specifically, Section 44ADA might apply, allowing for 50% of gross receipts to be declared as profit, taxed at the individual's slab rate.

Sridhar

Sridhar (Querist)

27 July 2023 Dear Experts,

My friends and I worked as a group, We received money in my personal account via paypal. We shared the money among us. What ITR should be filed for myself in this case? P.S: I haven't paid any advance taxes yet.

Also, please let me know under which section I can show my expenses (like salary, investments) or how do I calculate the taxable income

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 July 2023 For what purpose you received money?
What was your services?

Message likes : 1 times

Sridhar

Sridhar (Querist)

27 July 2023 We outsourced projects to provide engineering services, Sir

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 July 2023 You can file ITR 4 with presumptive assessment.

Message likes : 1 times

Sridhar

Sridhar (Querist)

27 July 2023 Thank you for the response, Sir. How do i calculate my profit here. As I already mentioned, we worked as a group but the money had been received on my personal account.

For example if i received 15 lakhs in the FY, what would be my taxable income, sir?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 July 2023 What is the amount of total receipt?
Any tax deduction by paypal?
In whose name the paypal issued warrants?

Sridhar

Sridhar (Querist)

27 July 2023 The total amount we received is 16,54,145.
They deducted their service charge as 4.4% + 0.3 USD + 18% GST for their service charge and also conversion charges.
The paypal is in my name. But i issued MSME certificate as business proof, sir.

Thank you again for resolving our issue

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 July 2023 Here your fried is not on board. The transactions have appeared only in your name and should have been reported in AIS report.
Confirm AIS details.

Sridhar

Sridhar (Querist)

27 July 2023 In AIS, the transactions were not reported but the interests credited to the respective accounts have been reported, sir. Can i use 44AD and show 6% of my gross as my profit, sir?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 July 2023 As per your services provided it will come under sec. 44ADA IT act.

Sridhar

Sridhar (Querist)

27 July 2023 The total amount we received is 16,54,145. if we filed under section 44ADA, We have to show 50% of gross as profit (8,27,072.5/-). I have to pay 30% from that as tax. Is it so, sir?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 July 2023 Why 30% the tax liability will be as per slab rate.

Sridhar

Sridhar (Querist)

27 July 2023 Oh. Got it, sir. Thanks much for the help.

Message likes : 1 times

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 July 2023 You are welcome.