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Income tax for my paypal transaction !!

Discussion in 'PayPal' started by jhn2001, Feb 1, 2008.

  1. #1
    I would like to know on how can i save my income tax on the paypal transaction carried out with my bank account .

    if i get around 1000$ a month from 10 different paypal ids (from different forums)

    and theres no documentation or sumthing of the work carried out between us.
    how can i save my income tax ? i dont really wanna pay 33% or what ever it is. some income tax saving tips ? i have never paid income tax before and dont want to mess with tht department either .

    reply will be highly appreciated !
     
    jhn2001, Feb 1, 2008 IP
  2. eddy2099

    eddy2099 Peon

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    #2
    Technically speaking, no matter from which forums you earn the income from, as long as you are involved, they are subjected to tax submission. However with deductions, you probably would be reducing your tax liability.

    Incidentally when youmentioned 10 different paypal ids, I hope you mean 10 different email addresses you use with paypal and not 10 paypal accounts.
     
    eddy2099, Feb 1, 2008 IP
    jhn2001 likes this.
  3. jhn2001

    jhn2001 Well-Known Member

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    #3
    Yes its abt recieving payment from 10 diff ppl . but how can i lessen my tax ? ethical or unethical way any idea ?
     
    jhn2001, Feb 1, 2008 IP
  4. eddy2099

    eddy2099 Peon

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    #4
    I believe if you are a registered business, either a sole proprietor (DBA) or incorporated company, you can claim for deductions such as business expenses and so on. This would help reduce your tax burden.

    I am not sure which country you are from so it is hard to be specific. In some countries, if you have a lower income level, you may be exempted from tax or fall into the lower tax bracket.
     
    eddy2099, Feb 1, 2008 IP
  5. jhn2001

    jhn2001 Well-Known Member

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    #5
    Thanks for replying eddy
    I am from india .
    I dont have a registered business,if i get registered will it help me decreasing my tax ?
     
    jhn2001, Feb 1, 2008 IP
  6. eddy2099

    eddy2099 Peon

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    #6
    There are a lot of Indians here so I am sure they can help you. I am not from India so I better not try to advise you and get it all wrong as I am not familiar with the Indian tax laws.
     
    eddy2099, Feb 1, 2008 IP
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  7. l0ng2111

    l0ng2111 Active Member

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    #7
    Does paypal collect tax? I have a AU account, much $ in there, i didn't see any tax issue

    online business is taxed?

    What if paypal bill us tax, the bank where we receive paypal withdraw bill then government bill too, so we have to pay tax 3 times?

    I think only the government can ask for tax, paypal or bank cant do that
     
    l0ng2111, Feb 1, 2008 IP
  8. micksss

    micksss Notable Member

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    #8
    Your right paypal doesn't keep track of taxes for you. You need to keep track and report all income at least in the US I don't know about India.
     
    micksss, Feb 1, 2008 IP
  9. Nick_Mayhem

    Nick_Mayhem Notable Member

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    #9
    Keep the receipts of checks deposited in your account or money deposited directly. Start getting bills from now on for the expenses you make for your business to run smoothly.

    Get the bank statement of that financial year. Which will be from 1st April to 31st March.

    Now take this statement and your expense bills to a C.A. and he will prepare a balance sheet and also help you in filling the I.T. forms.

    Tax saving tips :
    Invest in Schemes that do allow tax benefits under some sections. I don't want to quote here about it as I am not an expert but any bank will offer you schemes like this which are 100% legal and the best way to save tax and save money for future.
     
    Nick_Mayhem, Feb 1, 2008 IP
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  10. jhn2001

    jhn2001 Well-Known Member

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    #10
    thank you

    paypal doesnt keep track of the taxes but the bank to which u withdraw the money will certainly keep track of it

    thanks for your advice
     
    jhn2001, Feb 2, 2008 IP
  11. eddy2099

    eddy2099 Peon

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    #11
    Well at least you should be thankful that in India, you only need to report the income which you withdraw to your local bank account. Here in Singapore, no matter whether you withdraw the money, spent it online or left it at Paypal, you would need to declare everything as long as you made that money.
     
    eddy2099, Feb 2, 2008 IP
  12. jhn2001

    jhn2001 Well-Known Member

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    #12
    I Know many indian Webmasters who don't pay any tax !! ! i certainly dont want to be one of them :)
     
    jhn2001, Feb 2, 2008 IP
  13. Nick_Mayhem

    Nick_Mayhem Notable Member

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    #13
    Well the advice I would give is pay it. It is really good thing. At first it feels like not paying it. But it is illegal not to pay taxes.

    Best way to do the business and that also legally with peace of mind is to pay up the taxes. Establish your business and grow it. Within a short period of time you will know that you did the right thing by paying it up and clearing up the mess.
     
    Nick_Mayhem, Feb 2, 2008 IP
  14. jhn2001

    jhn2001 Well-Known Member

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    #14
    Yeps Paying tax ,makes you do your business with complete peace of mind !

    Last year i heard from one of my frnd that he made an overall profit of 30 lakhs indian rupees but he said that paid only 30 thousand .. which is very less compared to the normal 33% deduction .

    I Wonder how he manages it ! never had a chance talking to him after so am trying out forums ..nd Guz what i dont get any reply from any Indian ..i wonder how many indians webmaster pay their taxes !!
     
    jhn2001, Feb 2, 2008 IP
  15. eddy2099

    eddy2099 Peon

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    #15
    Incidentally, I do see the word 'lakhs' being used from time to time. What is that supposed to be ?

    In any case, I believe that you could claim some kind of deductions such as for business expenses and not say do a outright tax payment on every cent you make.
     
    eddy2099, Feb 2, 2008 IP
  16. bestofmoney.info

    bestofmoney.info Peon

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    #16
    Several paypal ids ? Don't you know it's forbidden by paypal TOS ?
     
    bestofmoney.info, Feb 2, 2008 IP
  17. Nick_Mayhem

    Nick_Mayhem Notable Member

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    #17
    100 Thousand = 1 Lakh

    Thanks.
     
    Nick_Mayhem, Feb 2, 2008 IP
  18. jhn2001

    jhn2001 Well-Known Member

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    #18
    Eddy 2500$ = 1 lakh Inr

    Well i have found out that 2 1/2 years back none of the indian had to pay tax for any of their money made online, but it has changed now ....

    will i have to show them any proof of the business expenses made ?

    I can even show them some fake expenses and save almost 90% of my tax .
     
    jhn2001, Feb 2, 2008 IP
  19. gopalgkb

    gopalgkb Guest

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    #19
    Hi, Indian here but not for solutions, just my normal layman thinking :). I hope other INDIANS will show you some correct way.

    But I did gather some vital information about expenses which can be deducted and thought to share it with you.

    1) Communication Expenses including total Internet charges
    2) Pay to couple of assistants who helped you say around 4-5 each month. I
    guess you need to take signatures on some vouchers.
    3) Say about 25% electricity bill if you are working from home
    4) Depreciation amount for Computers, Vehicle etc
    5) Decent Average Petrol Expenses for the whole year

    To Summarise, I guess one can be relatively safe if we file our returns with NIL tax for an amount of 3 lacs earned. Anything above that, I think one should start paying bare minimum per lac. Your take on this ??

    For 3 lacs income.

    1 lac = Standard Deduction
    1 lac = Investment like PPF, NSC, LIC, Mutual Funds, ELSS etc
    1 lac = Expenditure

    Ok, I want to know what kind of Books of accounts to be maintained. A simple excel statement showing all the incomes, withdrawals etc is enough or does one have to maintain traditional books hiring an accountant.

    Also, are we supposed to compute the Paypal amount after deduction of their fees or gross amount. Bear in mind, we receive only deducted amount in local Indian Bank.

    Thanks

    Regards

    Jeet
     
    gopalgkb, Feb 3, 2008 IP
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  20. l0ng2111

    l0ng2111 Active Member

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    #20
    I dont think the bank gonna track tax, and bill you. they cant

    example, incase the bank can collect tax.
    You received 100, pay out 80 for good, you earn 20, then that 20$ will be taxed, let's say 30%, bank will bill you 6$
    But if you withdraw cash, then use cash to buy good, how the hell the bank gonna know that. so the receiving amount of 100 will be taxed, then it's 30$ tax. ..

    As I know in the US, bank doesn't collect tax, they do track all transactions relate to business activity, and work with the government, and IRS, but they can use the receiving and sending amount to calculate tax.

    BTW, I do not live in the US, but this is what i told from my US bank where i hold an account there.
     
    l0ng2111, Feb 3, 2008 IP