Question

Dear All,

I have taken up a six month assignment with an organisation. I'll be serving them as full time consultant. compensation would be Rs.18,500/ month. Going by the rules 10% of it would be deducted. I wanted to know- Is there any way how I can save this 10%? Would rent receipt or some sort of investment help?

Awaiting Response.

Replies (7)

DEAR MR.PARASAR

 

your total fee comes to rs.1,11,000 which is lesser than the basic exemption limit. More than presenting  any rent receipt etc.. you can apply to income tax department to get a non deduction or deduction at a lower rate certificate u/s 197 of the Income Tax Act 1961and provide a copy of it to the deductor. It applies only if you have the above income alone throughout the year.. If you have any other source of income, the opinion may differ.

 

Regards

R. S A R A N R A J B.COM;IDA

Dear Sir,

It is difficult to aviod TDS deduction in this case but then it doesn't mean that u cannot reduce ur Tax Liability but u have to claim refund for that by filing ur return of Income.

U can claim ALL legitimate expenses which u might have incurred or which u would incurr in earning this consultance income like Conveyance, Telephone Charges, Books, Depreciation on Car, its running & maintenance etc etc

Further as far as rent receipts goes u can claim deduction u/s 80GG in respect of that..

this consulatancy income would be Business income for you. And as u can claim business expenditure as mentioned by Mr. Amir to reduce your profit as well as tax liability too.

regards,

ratan

Dear Saranraj,

 

It would be extremely difficult to get lower deduction because Form 13 requires details of preceeding two years which doesnot seem to be the gentleman's case..

Hi Parasar,

Obtaining Lower Deduction Certificate is not that much easy to get it from IT Dept & i also agree with Mr.Nicky. Hope there is one more option. You can ask the concern organisation to bifurcate the amount of 18,500/- in to consultancy charges and reimbursement of expenses. Say 12000 as consultancy charges & 6500 as reimbursement of expenses for which you have to submit bill like car rentals, food bills, telephone bills etc on which they wouldnot deduct TDS. They will deduct TDS on 12000 consultancy charges @ 10%, where you can plan some tax savings. Hope this restructuring will help you some extant. By the way, you can not avoid entire TDS deduction. As usual 80GG and other relevent expenditure can be claimed as applicable. Thanks & Regards: Saida 

Dear Parasar, 

The best way out is to get No Tax Deduction Certificate from IT Dept. as suggested by Saranraj. Even though its bit tough you may get it by making proper follow up with the concerned officials.

Dear Ashish,

 

The problem here is :

a) He starts the assignment now and will have to take a lower deduction certificate which would take some time (approx 2 months)

b) You need to submit returns of last two years explaining WHY TDS should not be deducted which again is not possible by the question..

 

So why hammer a point with no strenght..

 

as far Saida is concerned circular no. 715 suppports claim

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