Abhishek BoseยทSaturday, March 14 2020ยทImprove this Guide

๐Ÿ’ธ How to file your taxes

Figure out the maze

โš ๏ธ Disclaimer: This is not trivial โ€” so you would definitely need a CA to do this for you.

TDS or not

If you are working remotely for an Indian company, it makes sense to get tax deducted at source. This will avoid you hassle of filing GST.

If you are working for a foreign company, you will have to take care of your taxes yourself. The tax slabs would be the same as any salaried person except your ITR form would be that for a consultant / self employed person and not a salaried person. And there are certain sections that you can qualify for.

Section 44ADA

India has relaxed tax calculations and book keeping norms for freelancers / contractors if your income is less than 50L / year. (income, not profit).

If your revenue is under 50L, and you are filing as a freelancer, you can file under their scheme in which you pay a tax flat on the 50% of your revenue without having to maintain books.

Presumptive taxation under Section 44AD, which was only available to businesses, has now been extended to include professionals effective from FY 2016-17. This is covered under Section 44ADA. Professional with receipts of Rs.50 lakhs or less can opt for this scheme. This also covers freelancers who do technical assignments such as website design or software development.

This is called Presumptive Taxation under Section 44ADA

Also in this case, you donโ€™t need to file any advance tax.

More info ๐Ÿ‘‰ https://getmoneyrich.com/presumptive-taxation-for-freelancers-section-44ada/

๐Ÿšจ If you own a company, you should look at Section 44AD.

Do you need to file GST

If your clients are Indian, you will have to charge them GST and file that separately if your income > INR 20L.

If your client is a foreign one, you will file 0% GST - so you don't have to pay any GST if you receive foreign funds โ€” but you need to file a Letter of Intent (or something) which tells the govt that all my money is coming from out of India and then you donโ€™t need to really pay GST. Your CA might help with this.

More info ๐Ÿ‘‰ http://www.legalserviceindia.com/legal/article-718-gst-on-export-of-services-abroad-five-interesting-points.html

New tax filing rules

Despite the scheme you choose, you will still fall under a tax slab. And this is where things have changed recently wherein you can file a lower tax if you show zero deductions. Again I am not sure whether you can combine Presumptive taxation with the new tax slab, so that is where you need to talk to your CA.

To understand more about the new and old slabs and the differences between the two and the advantages you can you have by switching between the two, check out the below articles

How to get more help

While services like Cleartax, TaxFino, etc are good, a personal CA will be better as they will give you more time and help clarify more doubts.

You can check with friends who are running business - I am sure they will be having contacts.

If you are part of RI group, and need some quick help then feel free to reach out to CAs in our slack community

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Abhishek Bose

Abhishek Bose

Creator of RemoteIndian community

Community for remote workers in India ๐Ÿ‘จโ€๐Ÿ’ป๐Ÿ‡ฎ๐Ÿ‡ณ๐Ÿ‘ฉโ€๐Ÿ’ป that enables Indian professionals to help each other navigate, balance and grow in a remote career.

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