PayPal and Filing Tax in India For Freelancer

I think you are wrong. Individuals can show themselves as self proprietor in India. You won't require to register and you can use PAN card on your name for business and pay taxes accordingly. Through this I think you can deduct amount paid to the employees in taxes. Let me know what are your thoughts on this.

 

Okay, I am not aware of self proprietorship. So how will you show the amount paid to your employees? In such case what deduction will you use?

 

If you are paying via PayPal best way would be to ask employees to send a simple invoice. Since we are talking about freelancing, an invoice explaining the work they have done and the amount to be paid will do it. Then you can deduct the amount from the total revenues which will reduce your profits on which you will pay the taxes.

I have heard that you don't require to attach any documents with ITR-4 form, although I am not sure about that. Therefore keep the printed records of monthly account statements from PayPal and attach the invoices for that month along with it.

I am not expert, still searching for solutions therefore I am not sure about any of this. Correct me where I am wrong.

 

What kind of tax-free are you talking about? Say, I am a sole-proprietor and run the business in the firm's name and receive money through bank wire in the firm's bank account, in such case, do I get any tax benefit in India?

 

Yes, Wire Transfers are not taxable. Just consult your CA. The Govt is earning foreign currency that helps the economy.

 

Thanks, I will consult soon. Btw, if I am a freelancer and get the money by wire transfer, is it still tax free? Or is it applicable only for firms (sole-proprietorship, partnership, etc) ?

 

Laws are applicable for all.
If you are self-owner of a firm, then your PAN card is the pan card of the firm as well, your bank profit serves as profit for the firm.

 

I don't think wire transfers are tax free. If your income crosses 1,60,000 mark than you will have to pay tax also submit PAN card to your Bank else bank will deduct TDS starting this year.

 

Any money that comes in your BANK is taxable sir, nothing like wire transfers are free. they are not exempted.

 

right, But there are reductions. Not totally free.

 

From 1st March paypal balance needs to withdrawn within 7 days. Moreover you cant pay anyone from paypal.
So for tax show your bank statement. If you are using credit card to pay your employees show those bills as expenses. Another thing which I like about our Govt is the sole propertiership idea. You can add your computer, electricity, home rent, internet, phonebills etc as expenses. You will need your PAN card and thats all you will need.

 

Very good thread for Indians I am also suffering with this problem and got the good answers here. Thanks to all for their valuable suggestions.

 

Posting a question to old thread. Hope I get reply here. Do we need attach the electricity bills, internet bills to claim as business expenses? I work from home, so how to show my part of electricity expenses when the bill paid is for entire home usage?

So anybody can confirm now that whether we need to attach documents as proof with ITR-4 form?

 

Obviously you cant claim the whole electricity bill. You can mention a decent amount as your expenses.

 

You don't have to attach any documents when filing Income Tax returns

 

Thanks for the information. I feel the filing of income tax should be easy for freelancers like ITR-1 form. Filling ITR-4 is too difficult.

 

Thanks for the useful info. Do anybody here take the pain in submitting ITR-4 form?