I have a query here. Dollars which we transfer from Paypal account to our Indian Savings Accounts we are not paying any tax for that.What can be the legal issues which we might face from Income Tax department in India.We all now have Pan numbers and all the savings accounts are linked to the Pan numbers.So if necessary the IT department can always lodge a complaint of disproportionate income on us. Any idea whether this can be an issue here?
First of all you need to show your this income (through paypal you get) in your income tax form at the time of filling your return for that financial year and if you need to pay any tax on your income then you have to pay that after all excemption. DON.
Income tax is based on income which you earn while you are physically in that country. So if you are in India when you earn the money through Paypal, the income is subjected to income tax no matter whether you bring it back to India or not. Remember, it is Income Tax and not Bank Deposit Tax.
You need to pay tax and submit FORM-16 to enjoy the money you're getting. BEWARE YOU'RE LIABLE TO GET IMPRISONMENT ALSO!
Income from the internet should be treated just like any other income and one is liable to pay tax depending on the income bracket one's income falls into...(of course after deducting the eligible expenses and exemptions! ) Regards, RightMan
I assume that you are providing service outside India and are receiving money for the same via paypal if you have a turnover of more than 10 Lac in a given financial year then you are liable to pay service tax @ 10.36% then comes the issue of Income tax If you are providing service out side India you can get service tax exemption for that you need to provide that you are receiving funds from abroad now this is a problem with paypal they make a NEFT transfer to your account so its considered as a domestic transfer as paypal does not provide (FIRC Foreign Inward Remittance Certificate) all the income will be liable for service tax
Agree with Rahul. Also, when u are withdrawing in your bank, anyways it comes into your accounts. So, no special mention of paypal required.
just hire an accountant. I think most will charge about Rs.3k to 5k annually and you will get the best advice. You need not confuse yourself and he can save you a lot of tax money you owe to govt. There are so many regulations in IT law only auditors would understand, not webmasters.
Hi, Thanks for your advice. Yes I earn funds from abroad and within India as I am a seller in ebay like many others.As you rightly put it though the money is transferred by Paypal its not showing as a foreign remitance here.Say in a year I earn 5 lakhs by transferring Paypal Dollars to my Indian savings account I need to pay the required Tax for that 5 lakhs. Am I correct?
If you earn 5 lakhs throughout a financial year then you have to pay tax on around 2.5 lakhs after deducting the eligible expenses and exemptions! (1.50 lakhs exemption + 1 lakhs (ppf,nsc,lic etc.)). Better you hire someone to do this job for you (ca near to you). DON.
DON is correct in his assessment of how much you are liable to pay tax. I would advise you to take the service of a good chartered accountant who would readily guide you and show you various ways and means through which tax liability can be reduced...in a legal manner! Regards, RightMan
Thanks. Actualy in my Form 16 income incurred from other sources (where I am employed) will also reflect.So all the investments amounting 1lakh will take care of that itself.
If I earn 1000$ in March 2009 and withdraw in arpil 2009 , then which accouting year this amount become taxable ?
If you are extensively using paypal for collecting online income and if online activity is your major business activity, then you might be needed to maintain and submit even your paypal account statement which will mean that your income would be counted for the financial year 2008-09. Regards, RightMan
If you withdraw in april 2009 that means money hit your bank account in April 2009 so you need to count that income for accounting year 2009-10 (financial assessment year 2008-09). Better you consult your CA and he'll guide you further in this properly. DON.
I need a small clarification here. Most of the items which we sell through Ebay don't contain a proper Invoice with Registration numbers and all.The buyer pays us based on an automated Invoice generated by ebay sent through email. The moment we have to show this income under Form 16 and pay Tax the authorities would ask us the source which means proper documents of bills need to be shown.Neither we have a proper Invoice nor we can make one.Also the moment we go for a proper Invoice Sales Tax will come to the picture. So how do we resolve this while paying the Tax.Can anyone of you please suggest?