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Important query on savings on income & service tax

Tax queries 568 views 3 replies

RANJAN

Others

32 Points Posted on 04 February 2014

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)

Guest

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)