hello dpr's i m living in india and want to clear little tax query. How we have to pay tax for paypal income that we earn from online business.?? this are 3 major doubts... 1) Are they cutting the tax automatically or does this tax which are cut from this online deals reflects in the annual tax bill statement that we get every year. ?? 2) If we transmit huge amount to bank accounts without giving tax then IT department may rise questions regarding tax and all things relating to online business. 3) can we solve this tax problem by showing the receipt of transaction to our respective tax consultant. ?? kindly reply asap!!
You have to pay taxes from income earned. it doesnt matter whether you have earned it online or offline. 1. I dont think they cut taxes automatically, and i am not sure you are referring to TDS for working class people. It doesnt matter, everyyear you have to file taxes manually as self-employed. 2. As far as i know banks always report high value transactions to IT dept. My auditor always told me to be careful and i shouldnt do things that will get noticed by IT people. 3. yes, take a printout of all your paypal receipts for proof of source of funds. Your bank account statement is sufficient to file taxes for the start. Remember without PAN number you cannot file returns. Hope this helps!
1. Paypal doesn't cut tax automatically, because people use it in different forms. Some people send money to their relatives abroad, while others work on freelancing sites and earn money. If you cross the taxable income, then you need to calculate tax and pay it. You can avail some tax benefits by investing in Public Provident Fund, 5 year bank FD, life insurance, ELSS, etc. under Chapter VI A (Section 80C) of the Income Tax Act. 2. I would suggest you transfer small amounts every week. I think IT department checks all large transactions over Rs. 50000/- and above. All such transactions compulsorily require PAN and get reported to IT department. 3. Yes, you can show receipts to your tax consultant. Or you could simply show your total income (online + offline) for current accounting year and then ask your tax consultant to calculate income tax. I would highly suggest to invest in tax saving schemes like life insurance, PPF, 5 year bank FD. You'll have pay less tax and also secure your future by investing in such schemes.
thanks guys for replying.... @unna- i m not having any good annual income rite now.......becoz i have not yet started working due to sme time problems.........i was just curious about this point....hence i asked.....