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Important query on savings on income & service tax

Tax queries 559 views 3 replies

Hello,

Please let me know how can I save on income tax on my consultancy fee. My clint is proposing to pay me 70% as consultancy and 30% as Conveyance Charges, Stationary, Telephone, Internet and Software etc. Total fee is 13L per annum.

Please suggest how I can save in my income tax. Further how to calculate the service tax? Will it be on 70% or on 100%. Who will keep the accounts of 30% and how ? Matter is very urgent.

Kindly help me

Regards

Ranjan

Replies (3)

If you are claiming 30% as reimbursements of the above mentioned expenses, do you think you can provide bills of Rs 390000/-p.a? If Proper documentary evidence and records (all invoices) are maintained for expenses incurred in behalf of Service recipient, then the service Tax may not be charged.  Commissioner of Service tax Vs M/sSangamitra Service agency [2013 (7)TMI 862]

Please note that reimbursements should be according to actual expanses incurred and not a % of total fees.

 

For the purpose of Income tax the entire 100% will be assumed to be your turnover.(your client will deduct TDs on the entire amount paid to you, so that he can claim that as expenditure)

What expenses can be deducted or accounted from the income of consultancy for taxable Income ?

provide salary provisions for staff below the limit of TDS to save Tax. 


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