Paypal and Income Tax India

Somebody mentioned personal tax ? and then what about service tax? Are we liable to same tax / tax slabs etc as salaried ppl? and what was all that about the "10 year tax holiday for businesses"?

Also, @Freelance_rkm,

how can you show all these expenses if you have nothing on record? I mean it's okay with electricity, phone, broadband, PC maintenance. Then books/magazines? you must be joking? are we entitled to taking tax waivers with such expenditures? And then what about fees to writer/editor? I can just write a name of a relative over there, but how do I prove that I actually paid something to the person..... Please explain

 

if you have nothing on record, then you can't prove anything. And definitely if you have receipts of payments towards magazine, they it is a valid expenditure.

Suppose, you are a photographer, then you can subscribe to some magazines/ journals whose yearly subscriptions can reach 4-5k p.a. easily.

And you can engage anyone as writer/ editor. Just pay them buy cheque. Payment in cash has no legal validity until the other person agrees to give you a receipt.

 

i paid around 1 lack to my brother. Can i show this as a salary paid to him or as a gift??

 

How did you pay? By A/C payee cheque or cash? If cash, you need a receipt from him and the reason for payment.

And remember, this payment of yours will be treated as his income and he will need to pay tax accordingly.

And my suggestion, that you should always pay your employees as their "professional fees" for the service rendered to you. If you show the expenses as salary, an employer-employee relationship will be established between both parties and the concept of business will come.

And I guess, you have to payment more tax if you show your income as "income from business" rather than "income from profession".

 

i paid him via online money transfer. He lives in any other city and he is a student. I paid him for his tuition fee.

 

please elaborate,


M.

 

i guess, there is some tax rebate if you pay for tuition fees/ educational expenses for someone financially dependent on you.

 

no service tax as service is provided to person not in India.