GST and income tax for freelancers

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Software developer
19 Points Posted on 14 November 2024

So i have some doubts regarding my freelance income and the tax and gst on it.

  1. If i file under section 44ada , the thing is if i have income of 40lakh and i file tax on 20lakh (50%) than how can i justify if i invested around 16lakh in stocks and suppose 8 lakh i payed for the prepayment amount of my home loan .. than its almost like i am spending 22 lakhs where i payed tax on 20 lakh only .. so what should be done here and if i suppose do 16lakh in stock and 8lakh i do a fd .. still its the same thing 
  2. Also i have 3 payment sources so in gst how to show all these .. 1st payment i get directly in m bank account , 2nd i get in a online portal which does local offramp and then i offramp it to my bank and same for 3rd .. but how do i show this exactly in my gst returns and do i need to file return eveymonth with 0 gst as all are export of goods
  3. Do i need to file for a lut number and then attach that lut number in all of my next invoices now that i got a gst number ? like is this step required
  4. is firc required ? do i need to maintain files for firc ?
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On 14 November 2024 at 03:31 Report
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Quick Summary
This discussion addresses common tax and GST queries for freelancers, particularly concerning Section 44ADA. It clarifies how to declare income and justify expenses like stock investments and home loan prepayments when filing under this section. The conversation also covers managing multiple payment sources, the necessity of filing monthly GST returns (even zero returns for exports), and the requirement for a LUT number for GST-exempt exports. Advice is given on differentiating business income from personal investments and the importance of consulting a tax professional for accurate compliance.

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Master in Accounts & high court Advocate
9620 Points Posted on 14 November 2024

quite a few questions here! Let's break them down:

1. Taxation: Filing under Section 44ADA, you've shown income of ₹20 lakhs (50% of ₹40 lakhs). To justify the remaining amount: - Investments in stocks (₹16 lakhs): Claim as a capital gain exemption (if long-term) or show as an investment expense. - Home loan prepayment (₹8 lakhs): Claim as a deduction under Section 80C. 

2. GST: - Multiple payment sources: Show each payment source separately in your GST returns, mentioning the respective amounts and dates. - Export of goods: File GST returns monthly, even if it's a zero return (if no GST is applicable). - LUT (Letter of Undertaking) number: Required if you're exporting goods/services without paying GST. Attach the LUT number to your invoices. - FIRC (Foreign Inward Remittance Certificate): Not required for GST purposes, but necessary for foreign remittances.

 3. GST returns: - File GSTR-1 (details of outward supplies) and GSTR-3B (summary of outward supplies and input tax credit). - Mention all payment sources and amounts in GSTR-1.

4. Other queries: - FD (Fixed Deposit): Show as a savings instrument, not related to business income. - Investment in stocks: Show as a capital gain exemption or investment expense. 

Please consult a chartered accountant or tax professional to ensure accurate compliance with tax and GST regulations. 

They can help you with: - Accurate reporting in tax and GST returns - Claiming deductions and exemptions - Maintaining necessary documents (e.g., FIRC, if required) - 

Ensuring compliance with GST regulations Remember, it's always best to consult a professional for personalized guidance on your specific situation.

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On 14 November 2024 at 13:58
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Software developer
19 Points Posted on 14 November 2024
  1. home loan is under brother name , i am just doing prepayments .. also i am following new tax regime so cant do the Section 80C. Also my point is different , i was asking that if i show 20lakh as my income and i am spending for example like 24 lakh on doing stock investment than is it correct to still show 20 lakh as income in section 44ada ? cause if income is 20 lakh then how am i spending 24 lakh on investment 
  2. Also for the registering LUT can i give my brother and my friend name as witness will that be ok?
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On 14 November 2024 at 21:20

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