I have salary income in the form of pension from my previous empolyer. I am also self-employed.
What tax benefits can I avail - Standard Deduction for Salaried Person OR business expenses for Self Employed Person OR both based on quantum of income from each source. If I can avail only one of these, will that depend on which is the bigger source of income and can I change my status from year to year from salried to self employed and vice versa?
Your question is answered as under:
1. Pension Income: There is standard deduction available from this income. Hence, your whole pension income, as received by you, will be taxable without any standard deduction.
2. Income from Self Employment:
A) If in the nature of Profession: If the income you are earning is in the nature of Professional Services then you have to declare atleast 50 % of the Gross Receipts as your Income.
B) If in the nature of Business: If the income you are earning is in the nature of Professional Services then you have to declare atleast 8% of the Gross Receipts as your Income.
Hope this shall help.
Thank you.
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