For a Consultant who receives income through paypal. Gross income is income including paypal charges? and looking to avail 44ada 50% exemption
if so how is paypal gst treated if the individual is a gst unregistered ? and what should be shown as income for itr.
Should the income credited to bank or income including paypal charges would be Gross income
I'll break down the key points:
Gross Income: 1. *Gross Income Definition*: Gross income for a consultant typically includes all receipts before deductions.
2. *PayPal Charges*: PayPal charges are deductible expenses. Therefore, gross income would be the amount received from clients before PayPal charges. 44ADA 50%
Exemption: 1. *Eligibility*: To avail of the 44ADA 50% exemption, the consultant's gross receipts should not exceed ₹50 lakhs.
2. *Computation*: Compute the 50% exemption on the gross receipts (before PayPal charges).
GST Treatment: 1. *GST Unregistered*: As an unregistered individual, GST is not applicable. However, PayPal may charge GST on their services, which is a separate transaction.
2. *PayPal GST*: PayPal GST is a cost to the consultant and can be claimed as a business expense. Income for ITR:
1. *Gross Income*: Report the gross income (before PayPal charges) in the ITR.
2. *Deductible Expenses*: Claim PayPal charges and other business expenses as deductions. Accounting Entries: 1. *Income*: Record the income received from clients (before PayPal charges) as revenue. 2. *PayPal Charges*: Record PayPal charges as a deductible expense. To illustrate: - Client payment: ₹10,000 - PayPal charges: ₹500 (GST included) - Gross income: ₹10,000 - 44ADA exemption: 50% of ₹10,000 = ₹5,000.
YOGESH KAPOOR AND ASSOCIATES
New Delhi
B.Com
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Aggarwal Sarawagi and Co
New Delhi
CA
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