Tds

TDS 625 views 7 replies

manish kedia

yet not

319 Points Joined August 2011

I am in dilemma about a couple of topics and require your expert advise.
If a person is engaged as a Consultant for a company in India - the TDS is deducted @ 10% u/s 194J - and the person shows this income under the head Business & Profession. As the tax is paid before no further tax payment is required to be paid by the person.
If he was employed as an employee during the first part and second part as a consultant the tax paid will be 30% (or 20%/10% - as the case may be) for the amount received as employee and the amount received as consultant will be taxed as 10% - is the understanding right.
Now if he has worked as a Consultant for a foreign company (not having any office in India) and x amount of money is received in India as consultancy fees - then what is the tax rate for the same. As he is not an employee of the company it will not be a salary income and he has show it as Income from Business & Profession - but at what rate?
Say the income received during the year is as follows :-

Rs 7,00,000 - as an employee - Here the company deducts tax and gives the residual to the employee
Rs 7,50,000- as a consultant from a Company in India - here the company deducts tax @ 10% u/s 194J and tax particulars are taken care of and no extra tax is required to be paid by the person.
Rs 1,00,000 - as a Consultant for a foreign company - here does the person pay Income tax @ 10% or @ 30% as the total tax income is above 10 lakhs.

It would be very kind of you - if you can guide me through this tricky situation.
Thanks in Advance.

Replies (7)

Guest

Income from salary Rs 700000/-

Income from business/ profession Rs 850000/-

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gross total income Rs 15,50,000/-

Less: deductions u/chapter VI A XXX

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Total income Rs 1550000

income tax thereon 295000

Add: education cess @ 3% 8850

Total tax 303850

Less: TDS xxx

Add: interest XXX

manish kedia

yet not

319 Points Joined August 2011

Dear Madhavi

Thanks for Your Reply. But there are 3 different cases.

(a) If a person is engaged as a Consultant for a company in India

(b) If he was employed as an employee during the first part and second part as a consultant

Income Tax Wala: (Fin. Expert)

Chartered Accountants

2015 Points Joined August 2010

Dear Manish

1. the income from consultancy business should be after deducting expenditure incurred to earn that income.

now your three questions you ask:

a and c: . it does not make any difference if you have income from consultancy for any person in india or outside india. In both the cases consultancy business income (after expenditure) is taxable in india under the head Income from PGBP.

b: If you worked as employee for first 6 month and as a consultant for remaining 6 month it not effect the calculation part as well as taxability part.

the difference is only that income would be taxable under two heads of income i.e. Salary and PGBP IN ITR 4