Freelance Foreign income -taxability

Applicability of Service Tax:

Service provided by you would be covered under "Support services of business or commerce" popularly known as Business Support Services and hence service tax is applicable. However if the following conditions are satisfied then it would be considered as Export of Service and hence not chargable to service tax

1) The service is provided in relation to the business or commerce of the client and the recipient of service is located outside India OR service is not provided in relation to business or commerce of the client and the recipient of service is located outside India at the time of provision of service.

where such recipient has commercial establishment or any office relating thereto, in India, such taxable services provided shall be treated as export of service only when order for provision of such service is made from any of his commercial establishment or office located outside India.

 2) Payment should be received in convertible foreign exchange.

Assuming that service provided by you is in relation of business or commerce of your client service tax is not applicable.

Income Tax Liability:

As per section 44AD if your gross receipt during the previous year does not exceed Rs.60Lakhs then 8% of your receipts shall be deemed to be income chargable under the head Profits and Gains from Business or Profession. You are not required to pay advance tax in respect of such business.

Your employer is under the obligation to deduct tax only on salary income. As per section 192 it is not mandatory to furnish details of other income.

Hi Alok,

Thank you very much for your reply.

I sent you a PM. Can you please look into that.

Appreciate, if you can reply to my PM.

Thanks,

Viswanath.

Alok Siddapur, Please explain how freelance comes under 44AD. From other sites I found

1- Construction business as per section 44AD

2- Income from good carriage as per section 44AE

3- Business of retailing as per section 44AF

So I am confused. If possible please reply on my thread also

/forum/internet-business-and-income-tax-124707.asp

1. Do i need to charge them any service tax, VAT, GST for the services providing by me on freelance basis.?

No as explained earlier if the conditions are met.

2. What is the taxability of this income in India?

Liable to tax in India

3. Can i deduct my expenditure towards purchase of Computer, data card connection, furniture for freelance setup.

Yes, but only depriciation on furniture and other fixed assets and not the full amount.

4. Do i need to inform this income to my employer while issuing Form 16 by him for my salary income?

Ideally you should.

5. Appreciate, if any one can throw some light on the above points to reduce my worry regarding my tax liability