Internet Business and Income Tax

First of all you don’t come heading of professionals. And you can pay tax according to section 44AD.

Pankaj Arora, Please tell the answer for following

What is the reason for saying that my business comes under 44AD. I dont know about the rules, But I would like to know how it comes, Later if needed any explanation to Tax officers,I have to answer na

Will I have to pay 8% of 15Lac or only pay 8% of profit ?

My bank account carry some personal transaction also,Like Money transfered to my father's Account,Money received from my brother's account, Money transfered to my own other back account etc.

Which ITR I have to fill and what is procedure for that, Efiling can be done or need to hire a CA guy ?

Will I have to show my credit card statements and Bank account statements to the Tax officers ?

I am not employed with any company in India, will that cause to say "My primary source of fund is from internet so I cant show it on 44AD"

Please help me, I am expecting reply from more people

Kindly take the help from a local CA as there are many complications in every case and a CA is the right person to deal with them.

CA. Anuj Gupta, I already talked to a Local CA guy, but he is having doubt how it comes under 44AD. In my business proof of income is my bank statement which shows Foreign wire and NEFT transaction.

And for expense its credit card statement, which shows payment sent using paypal,alertpay,moneybookers etc. All those payments are related to my business only. But I dont know how to submit those as proofs. Because I dont have a things like a receipt,a invoice etc becuase all business is done over online only.

Some people says I show show it under income from profession. But I am unable to determine how it comes to income profession. according to me any type of brokerage is a business. I want to know it come under 44AD or not. Because previous years 44AD was only ment for construction and related business. But new rule says any small business other than those comes under 44AE falls under 44AD.

Please have a look on file attached. 50_4_critical_analysis_of_new_section_44ad.ppt

So some one please advice me whats the best way to pay my tax. So that I can discuss the way with my CA guy and pay tax.

You are eligible for taxation u/s 44AD. Also documentary proof you are having are sufficient for your case.

Also you shall face problem for non deduction of TDS u/s 195 for payments made to parties outside India.

Anuj

9810106211

CA. Anuj Gupta, Please explain more about TDS u/s 195. what should I do for that. say I spent 5Lac foreign remitance. What should I do for that payment.

Normaly when I receive funds from abroad they told me that, They are not paying tax at source and I have to pay tax here in India. So why the similar thing cant happen in my case. The foreign remitance is done in smaller amounts like 10-50$ and multiple transactions to multiple people. If I pay TDS here in India, they my clients no need to file tax at their country according to DTAA between India and that country.

So please tell me how can I avoid the TDS u/s 195.

Also according to my calculation my tax will be following for payments received

received 14Lac.

8% of 14Lac = 1.12Lac. Which is already under taxable income. So will I have to pay tax for received money ?. or the 1.12Lac is the tax for my income ?

Paying TDS u/s 195 for foreign remitance is must ? If yes, the date already passed ? How much % I have to pay ?

Please reply, My CA guy also getting confused now

Dear Vijesh,

New rules says, that any small business other than those comes under 44AE falls under 44AD.

If any assessee is showing his/her NET profit around or more than 8% of his/her total reciepts / Sales than he/she is not laible to maintain his/her records.

if he/she shows NP less than 8% than his/her accounts must get audited.

In your case, would like to suggest you to maintain your books of accounts (cash book, bank statement, paypal transaction reocrds, Credit card records), this will show you whole your transaction, expenses and profit of the year...

as per your replies it shows, that you are earning 14Lac  /PA

than you must have to show your NP more than 1.12Lac, which is below the limit (for man Rs.160000/- is exempt) so there will be no tax laibilities foro you, and you have not to pay any tax.

:)

vkbothra, thanks for replying. I also come to know that my profit (1.12Lac) is under 1.6Lac and no need to pay tax, but I think I should file showing no tax liability.

Now my question comes abt sec u/s 195. I read that foreign techincal fees attracts 10% of TDS and non payment of TDS cause 1.5% interest every month. But my question is then why we get credit cards, every one use creditcards for purchase of goods, maily like premium accounts at filesharingsites. buying webhosting , buying goods from ebay etc.

Then according to sec 195 the user have to pay TDS for all these things ?

Also money sent/received towards relatives are non taxable ?

When I get money from abroad they are not deducting TDS or giving a TDS certifiate to me to avoid double taxation. Then why should I pay TDS towards payment sent by me for purchase of webhosting,internet traffic purchase etc

Please someone reply and help me

Money sent /received from reletives is tax free,

U/s 56(2)(vii) if any sum we get from our blood reletives Or we give to our blood reletives is non taxable.