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Consultant contract tax?

TAD Innovative minds (5 Points)

16 May 2021

I want to know like is there any difference between tax for consultant and employee contract

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7 Replies

Sivaramaraju G (Learner) (2398 Points)
Replied 16 May 2021

Consultant income will be come under profits and gains of business or profession and employee contract income will be come under income from salaries.

TAD Innovative minds (5 Points)
Replied 16 May 2021

So on a yearly income of 13 lac I have to pay around 25% of 13 lac?

Sivaramaraju G (Learner) (2398 Points)
Replied 16 May 2021

Are you an employee or consultant??

TAD Innovative minds (5 Points)
Replied 16 May 2021

Yes I have a consultant contract

Sivaramaraju G (Learner) (2398 Points)
Replied 16 May 2021

Then it will be professional income. you can deduct all relevant expenses from the gross receipts. like electricity charges, computer depreciation, salaries if any, Internet charges, traveling charges etc...
tax needs to pay on net profit/net income, not on gross receipts from consultancy services.

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veerendar singh (tax consultant) (3301 Points)
Replied 16 May 2021

It is good that you are into consultancy contract.
now you can reduce your net income by claiming expenses.
effective tax rate may get as low as 12% on net income.