Tax liabilities for freelancers / consultants?

In the financial year 2011-12, I've been a freelance consultant working in the Software Engineering industry.

I have questions about my tax liabilities and will be glad to have them answered.

* I don't have any company registered
* My annual income has been roughly 20 lakh.
* Majority of my income has been by billing overseas clients in exchange for software consultancy services
* Other portion has been by billing local clients for the same services. These local clients have deducted tax at source for each invoice I sent them. The deduction was 10 per cent service tax according to them. They have provided me Form-16 certificates for the same.
* This year I also became a published author and started receiving royalty payments. The publisher is U.K. based and I don't believe any tax deducations have been made.
* Some other minor miscellaneous incomes.

I've also had personal and professional expenses for which I've maintained the necessary documentation.

Can you please assert the following:

* I believe I don't owe GoI any service tax on overseas invoices, yes?
* Despite paying some service tax (in the form of TDS) I still owe GoI personal income tax, yes?

Am I missing any critical aspect? What would you advise for this year and going forward? Should I set up an organization to better manage things?

Thanks,

Sri

Hi Sri,

If you are exporting the services then it is exempt from service tax.

In case you are providing services in India and the revenue exceeds Rs.9.00 Lakhs then you have get yourself registered under service tax provisions however, you will not be liable to pay any taxes unless your revenue from india exceeds Rs.10.00 Lakhs.

You can setup a proprietorship firm and open a seperate bank account for all these business transacions, which will help you in proper accounting.

You are a resident of India so all the global income is taxable for income tax in india. As you are saying your receipts are Rs.20.00 Lakhs identify the expenses that you have incurred to earn this income and reduce it.

The profits will be chargeable to income tax.

the tax deducted from your receipts is not of service tax but of income tax.

You can claim the same at the time of filing the returns.

You should also calculate your taxes and pay advance tax if required., otherwise a you will have shell up a lot of money in the form of interest.

You can contact me if you need any professional help in this regards.

mrpraveen @ live.com