Comments on The Money Quest: Answering Readers’ Questions (# 2) – Starting a Co...

Sir, Thank you so much. It's simply super...

2012-01-30T21:27:41.972+05:30

Sir,
Thank you so much. It's simply super. In few lines you described all the necessary formalities and doubts in Sole Proprietorship Firm.

Very good note, Sir. But you are silent on what ar...

2011-12-05T02:21:15.508+05:30

Very good note, Sir. But you are silent on what are the claimable deductions that a sole proprietor can legitimately make in India. For example, if her business office is at her house, then can she charge 50% of her house running cost as an allowable expense?

Hi, Guys I am still bit confused, it seem to me...

2011-09-10T23:27:01.792+05:30

Hi,

Guys I am still bit confused, it seem to me that tax rate is higher for independent consultant. For example I pay 10.3% on grow, and then from rest I deduct my expenses and pay usual income tax. Am I right?

For example I earn 70lac per year for my work, and say my business expenses are 12 lacs per annum. So what would be my tax?

from what I understand, its as follow

Service Tax(10.3%) : aprox 7 lacs
Net Income: 70 -7 -12=51 lacs.

so then on 50 lacs I pay may income tax? or should I be able to take out those 7 lacs?

Thanks for the nice post. I have a query and reque...

2011-08-16T11:51:57.968+05:30

Thanks for the nice post. I have a query and request your inputs.
If I run a proprietary firm, offer my own services as a consultant as well as that of others (hired by me and paid)will this be considered a profession or a business?

CRS

If under a proprietary firm I offer my own service...

2011-08-14T21:33:09.806+05:30

If under a proprietary firm I offer my own services as well as that of someone hired by me, will it be considered as "Profession" or "Business", specifically for the purpose of auditing requirement (15 lakhs or 60 lakhs)?

CRS

HI Stevan What are the tax implications for provi...

2011-07-28T10:55:25.350+05:30

HI Stevan

What are the tax implications for providing consulting services to clients in US , sitting in India ? also do we need seperate account for depositing the dollar cheques ? is there any alternate way of receiveing payments from client for services offered ?

Rgds
Dhanashri

we have a proprietor firm offering services in Ind...

2011-07-27T17:31:20.605+05:30

we have a proprietor firm offering services in India, but in future we expect to get US clients as well, my questions are -
1. For the services provided how do we receive payment from US client ? can the cheque given by US client be deposited in our Indian Bank account ?
2. How will Double taxation affect us ?
3. will i have to file IT returns in US as well in addition to India ?

rgds
nilesh

Stevan, If you are working in a State such as Wes...

2011-01-02T22:17:54.557+05:30

Stevan,

If you are working in a State such as West Bengal, Maharashtra, Madhya Pradesh and Karnataka where Professional Tax is levied, you’ll have to obtain registration from professional tax authority; in my opinion no other registration is required.

For tax purposes, your professional income will be calculated separately under the head ‘Income from Business or Profession’ as already mentioned above and after clubbing with your other income, if any it will be taxed at the normal tax rates applicable to you.

I want to work as an independent management consul...

2010-12-06T21:08:25.196+05:30

I want to work as an independent management consultant for now, till i get another job. So,
Is there any professional consultant license or registration with any government body to be done?
Then how is the tax rules on the income i earn from this work?

thanks
steven

Anonymous, In case of sole proprietorship firm, P...

2010-12-05T18:11:42.847+05:30

Anonymous,

In case of sole proprietorship firm, PAN of proprietor is considered as PAN of the firm. Yes, TDS will be deducted in the name of the proprietorship firm; as the TDS certificate will carry your PAN number, so you’ll be entitled to get credit for the TDS.

When I start a proprietorship firm, do I need a se...

2010-11-23T07:26:43.417+05:30

When I start a proprietorship firm, do I need a separate PAN for the firm or will my personal PAN be valid. If it is the latter, what happens to the TDS deductyed? I think that when TDS is deducted it will be in the name of the firm. How does it come into my credit?

Thanks for this amazing post. I have recently set ...

2010-05-25T17:42:03.856+05:30

Thanks for this amazing post. I have recently set up a sole proprietorship management consultancy firm in Jaipur. I want to get CII membership; they are asking me for registration certificate. Where can I get the firm registered? Thanks

Hi, can you pls elaborate on following section o...

2010-05-07T18:24:48.301+05:30

Hi,

can you pls elaborate on following section of this wonderful piece of information: Website: Now a day, if you expect your clients / customers to take you seriously, it is a must to have your own website. So it is always better to buy a domain name at the beginning itself even if you would like to wait for sometime before launching your website.
Queries:
1. How do i buy a domain name.
2. What kind of charges are applicable from end to end i.e. opening the domain name, creation of website designing, maintenance of website etc.
3. Any suggestions on firms offering services mentioned above

Thanks,

Nitesh

Vinod, There are other forms of business organiz...

2010-04-07T22:30:14.683+05:30

Vinod,

There are other forms of business organizations also such as partnership firm and a company. But you can start with proprietorship and later on if the need arises convert it into either partnership firm or a company.

Web based IT start up is no different from a brick and mortar company as far as regulatory issues are concerned…only the business model is different.

This is an amazing post summarizing everything abo...

2010-04-07T00:10:13.630+05:30

This is an amazing post summarizing everything about a company setup. Am I correct in saying that the only way to provide consultancy is to setup a proprietorship firm? Also could you throw some light on setting up a web based IT startup? How different is it from a normal company?

This is an amazing post summarizing everything I w...

2010-04-06T23:56:33.209+05:30

This is an amazing post summarizing everything I wanted to know in one place. I'm planning to provide consultancy to a client in middle east. In this case could you guide me as to what is the best option for starting my consultancy? Should it be a sole proprietorship firm?

Dhanya, Yes, service tax will be applicable.

2010-03-16T19:02:25.216+05:30

Dhanya,

Yes, service tax will be applicable.

Hi, I have one doubt on this. If we as a consultan...

2010-03-15T17:02:50.475+05:30

Hi, I have one doubt on this.
If we as a consultant, offering our service to one of our foreign clients and the services are offered in India and not exported, can we charge 10.3% service tax?

Thanks a lot for sharing this wonderful article. I...

2009-11-03T11:52:01.341+05:30

Thanks a lot for sharing this wonderful article. I would love to read your further post.

Yes, of course, you can link to it.

2009-11-02T12:03:52.220+05:30

Yes, of course, you can link to it.

I did understand that 10% was not my tax liability...

2009-11-01T21:18:43.437+05:30

I did understand that 10% was not my tax liability and potentially was just as an advance tax deposit to what could be a larger or lesser depending upon the annual income I show . I would have no qualms even if GoI wanted me to do it.

I just wanted to make sure if my client had to follow Indian tax protocol and your reply clarified that.

Thanks much. BTW, can I link this back from my blog?

You are getting confused between TDS and tax liabi...

2009-11-01T17:23:17.074+05:30

You are getting confused between TDS and tax liability. TDS deduction @ 10% doesn’t mean that your tax liability also amounts to 10%. While TDS gets deducted from your gross professional receipts, your tax liability depends upon your total taxable income and the tax rates / slabs applicable to individuals. (I’ve already written about how to calculate your taxable Income in another post).

Secondly, your international client is not bound by Indian tax laws and therefore not required to deduct tax at source. However, he might deduct the withholding tax, if applicable as per US tax laws to be read with DTAA between US and India.

Therefore, there is no such requirement for you to pay tax @ 10% at the beginning of the year.

Anyhow, there is yet another provision (section 208 to 211) under IT Act 1961 according to which you’re required to calculate tax on your total estimated annual income on or before specified dates (15th September, 15th December and 15th March) and if works out to be Rs 5,000 or more, you’ll have to deposit advance tax as specified therein.

This is fantastic. I appreciate your indepth cover...

2009-11-01T11:44:16.069+05:30

This is fantastic. I appreciate your indepth coverage on this issue. You have addressed issue that I otherwise would not have thought about.

I do have one question about TDS. You mention that as a consultant, 10% is deducted. If the service is being offered to an international client, who is the source? Does this mean I would have to pay 10% at the start of financial year?