Income tax on professional services rendered

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Rahul

25 Points Posted on 17 October 2013

Hi,

I am working in a company as an full time employee on their payroll and I have been issued a Form 16. Beside this I render my engineering services (software) to small startups in india as a part time. In this year Feburary (Financial year 2012-2013), I provided my services to one small startup in india and received a payment of around Rs 1,25,000. As per IT rules they deducted a 10% TDS and gave me remaining.

Since I was not much aware I filed a ITR 1 (with my current company F16) on this year before July without acknowledging that payment. I was about to send the filled signed ITR form to cpc bangalore but reliased that the payment made to me by the startup is reflecting in incometaxportal.org under my PAN number.

Now can somebody please guide me what are the next steps for me. How much Tax I have to pay on the payment received after the 10% deducted by startup and I read somewhere I need to pay some penalty tax, how much amount I have to pay for that. From my current company my taxable income is falling more than 10L so I am in a 30% tax bracket.

Thanks in advance.

Regards,

Rahul

Replies (5)

Rahul

25 Points Posted on 17 October 2013

Hi Akshay,

Thanks for your reply. My taxable income from my current company was 11L + 1,25000 was given from startup (total amount for services). They deduced 10% and gave me 112500.

Can you please tell me how much interest I have to pay and for how many months or amount.

Regards,

Rahul

Mihir

Wealth Manager

5358 Points Posted on 17 October 2013

You may file ITR-4. You are carrying on a profession on the side and earned 1.25lacs by providing professional services to startup. You may avail deductions in earning your professional fees and claim TDS as well. Your employer must be deducting TDS on salary. You can add the income from profession and compute the total tax, and deduct TDS from the tax liability.

CA Parul Saxena

6475 Points Posted on 17 October 2013

As you are coming under tax bracket of 30% then on your professional charges 30% tax is leviable.10% is already deducted by way of TDS now you are supposed to pay 20% on 125000 i.e.25000.As far as your salary income is concerned your employer has surely deducted tds on that so no tax to be paid on salary income.Your balance tax liability is Rs.25000 and interest to be computed on Rs.25000

CA Parul Saxena

6475 Points Posted on 17 October 2013

Rahul

25 Points Posted on 18 October 2013

Thanks to all for your quick reply.

Parul/Akshay,

I understand from your reply that I need to pay interest on the tax. Can you please let me know How you have calculated the interest with what percentage and for how many months. from 1st Aug or from 1st April. Payment was made to me on feburary but from incometax portal it shows me the that startup has made me the payment on 31st Jul (I guess they forget to pay it on time so shown the payment on 31st Jul).

Thanks in advance.

Regards,

Rahul