Tax computation for consultant

Hi Tulika,

If employee receives payment as a consultant it will come under professional and consultancy charges.

Service tax implication: Since amount exceeds Rs.10 lacs there will be service tax to be added @ 12.36%.

Take home: If this amount if excluding service tax then his his net receipt (take home amount) will be as under,

Basic amount                        14,00,000

Add: Service tax @ 12.36%     1,73,040

Less: TDS @ 10% on 14 lacs  (140000) u/s. 194 (J)

Net receipt                           14,33,040

Pros and cons:

He can claim expenditure i.e. conveyance, telephone, office exp., compter exp., internet exp., stationery etc. from consultancy income.

In salary he can claim conveyance allowance (Rs.800 per month), HRA, children education allowance, children hostel allowance (if these allowances are there in salary structure)

Thanks,

Devanand

Hi,

In case the assessee is recieving a fixed income ( salary) and an employer employee relation persists, then this is income is to be taxed under the head salaries, and no service tax need to be paid. But TDs will be deducted

Otherwise , this is a professional income liable for service tax and TDS.

In case of any further query PM or mail me .

AJH & CO.

anubhavjain @ ajhco.in

9868729930

He will receive professional fees instead of salary, and the company will deduct TDS u/s 194J. It is unlikely that he will have a service tax number. But he can claim expenses incurred toward undertaking the work of the company in his ITR-4.

100% agreed with devanand ji..