Contract positions in organization

 Section 44ADA, can be applied if the Gross receipt from profession does not exceed Rs. 50 lakhs. In such situation the profit shall be calculated as 50% of gross receipt i,e 25 lakhs. Now if you want to show lower profit then books of accounts are required to be maintained and they are also required to be audited.

Same PAN can be used. 

The company has to deduct TDS while making the payment. Thus it will be reflected in TRACES if payment of Rs.55 lacs is made to you

Do I need to register for service tax? Is the service tax need to be 15 % ? It is said that a contractor needs to give sevice tax and register for it once his income is more than 9 lpa.

How can the company make the offer such that they will provide offer of 50 lpa and 5 lakhs per year in some different way such that 44ADA can be applied? Can you please suggest a way in which company can give the 5 lpa so that 44ADA can be applied?

 If the company deduct 10 % of TDS, will it be considered as tax already paid by me on this 25 lpa under presumptive tax for 44ADA and I need tp pay the rest tax on 25 lpa at the end of the year with advance tax?

Can I show food expenses, house rent, medical expenses as my expenditures which the CA will audit? Will there be any limit on house rent, food expenses, medical expenditure as the limit for permanenet employees for medical expenditure is Rs. 1250 per month, travel expenses Rs. 1600 per month, food sodexo card for Rs. 2000 per month, HRA has also a limit with regards to the base salary?Can taxi bills be produced for travel allowance where the taxi bill will com nearly Rs. 30000 per month? Will the CA be very strict while auditing? What report does the CA need to provide after the audit?

Thanks for you reply.

GST registration has to be taken in your case. GST registration has to be taken if the gross turnover exceeds Rs.20 lakhs and if you are rendering services GST rate would be 18%. S.44ADA is for professional income so I am not sure in what manner the company wants to provide you Rs.5 lacs. 

TDS deducted can be considered as tax already paid by you and if it is excess deducted, you can claim refund.

A CA will follow the rules & regulations provided as per Income Tax Act and audit your financial statement.

Food expenses, house rent, medical expenses as you have mentioned are the components of salary for which different rules & regulations will be applicable. Kindly note that personal expenses will not be allowed as deduction. If you can prove that you have incurred expenses for the purpose of business, it will be allowed as deduction.

How to registrar for GST ? Will not the company pay the GST on my behalf? The company should pay the GST since they are taking service from me. Should I need to include the GST on the bill when I am raising the invoice to the company? Is it necessary to pay the GST on monthly basis to IT department? Should I send the GST amount to the IT department or the company should send the GST amount to IT Department? Generally in a shop when we purchase something the shop take GST from us and the amount of GST is mentioned in the bill along with the cost of the purchased item and the shop sends the GST to the IT department.

Once 44ADA is applied then 25 lpa becomes the profit assuming 50 lpa is the contract amount. Can HRA, food expenses, medical expenses, travel expenses be still deducted from this profit amount of 25 lpa to calculate the taxable income to pay tax? Does a CA needed to audit the account if 44ADA is applied?

 If the company deduct 10 % of TDS, will it be considered as tax already paid by me on this 25 lpa under presumptive tax for 44ADA and I need to pay the rest tax on 25 lpa at the end of the year with advance tax?

Thanks for your support.

Regards

 

For registration of GST you can apply online at www.gst.gov.in by providing necessary details. PAN is compulsory for registration of GST.

Company will pay the GST amount but you need to deposit the amount collected from the Company to Govt. GST amount has to be included in the invoice raised by you. However, for income tax purpose, GST portion will not be considered as your income. If your turnover is less than 1.5cr you can opt to file GST on quarterly basis. 

Once you apply for S.44ADA, you cannot claim any other expenses nor you need to maintain books of accounts. Audit is not required if you are not maintaining the books and opting for presumptive income.

Yes, the TDS deducted by the company will be considered as the tax already paid on your behalf.

Suppose 50 lakhs is the income per year. So 44ADA can be applied and then 25 lakhs is the profit in that year. Can HRA, food expenses, medical expenses, travel expenses be still deducted from this profit amount of 25 lpa to calculate the taxable income to pay tax? If the expenses for HRA+Madical expenses+food expenses+ travel expenses is Rs. 5 lakhs per year, will not then the tax needs to be paid on 25-5= 20 lakhs ?

Should the contract agreement write about GST also? If yes how should it be mentioned in contract agrement. Can you please provide a sample agreement copy where GST is mentioned if GST needs to be mentioned in a contract agreement?

Thank you for your supprt.

Regards

 

Once you have opted for 44ADA you cannot claim any other expenses what so ever. HRA & Medical allowance is part of salary and not deduction for profession. If you want to show them as expenses, you need to maintain books of accounts.

For the purpose of contract, you need to mention taxes will be charged separately as per the law applicable.

Originally posted by : CA Amrita Chattopadhyay
	Once you have opted for 44ADA you cannot claim any other expenses what so ever. HRA & Medical allowance is part of salary and not deduction for profession. If you want to show them as expenses, you need to maintain books of accounts.

Can HRA+Madical expenses+food expenses+ travel expenses be claimed maintaining a book of accounts when 44ADA is also applied? Is it necessary the the account to be audited by a CA as 44ADA is applied and also book of account is maintained for claiming deductions for HRA+Madical expenses+food expenses+ travel expenses?

There is a new query that if the person has contracted by an organization for 50 lpa in a financial year for a contract position in an organization and also that person has earnings from savings bank account interest of Rs. 12000 in a financial year and a FD interest of Rs. 30000 from FD interest in a Financial year, will he able to apply 44ADA still as the total income along with interest for that person if 50 lpa from the contract position, Rs. 12000 from SB interest and Rs. 30000 from FD interest and hence the person's total income exceeds Rs. 50 lpa in a fiancial year but the contract with the organization does not exceed Rs. 50 lpa?
 

Can you please also state whether the organization should directly pay the GST to the IT department in the registered GST account of that person or that person will have to pay the GST directly to the IT department?

Thank you for your support.

Regards,

Income from interest from saving bank and fixed deposit is considered as income from other sources. S.44ADA is only for income from business and profession. 

You will charge GST in your invoice, company will pay you the GST and you need to pay GST to the IT department.

Is this 44ADA applicable for business/profession income equal to 50 lakh per financial year contract or only for contract below 50 lakhs per year? Can you please check once and reply?

Are you trying to mean that 44ADA can be applied for income equal to 50 lakhs per financial year for a person even if that person earns interests from deposits in the same financial year while that person files the incopme tax return for that financial year in which the person's income is 50 lakhs from business and say 12000 from deposits.

The answer of following query is waited.

Can HRA+Madical expenses+food expenses+ travel expenses be claimed maintaining a book of accounts when 44ADA is also applied? Is it necessary this account to be audited by a CA as 44ADA is applied and also book of account is maintained for claiming deductions for HRA+Madical expenses+food expenses+ travel expenses?

Regards

S.44ADA is applied for income from business / profession. If you do not want to maintain any books of accounts or get your books audited (Tax Audit) by CA, you can apply for S.44ADA which just stated that your income (from profession) is 50% of total earnings from profession. You cannot further claim any expenses what so ever. Now if you want to show lesser income and want to pay lesser tax, for example you want to show 60% as your expenses and pay tax on only 40%, you need to maintain books and get them audited. In case of GST, you need to charge the company in your invoice and it will be your duty to deposit the GST by filing GSTR-3B and also file return. Income from FD is part of "Income from other sources" and it will not be considered part of S.44ADA i.,e Income from profession. Hope I am able to clarify your query.

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