Hey, Since after paypal has made it compulsory to withdraw all funds and pay from our CC's, on which income do we pay tax on? Do we pay tax on the amount withdrawn or the profits from this business? For example i flip a site for $1k that i payed $200 for. Then do i pay tax on $800 or $1k? Because technically the profit is only $800, while $200 is expenditure. So i have paid $200 from my CC, but withdrawn $1k to my bank after that. So which is the taxable income? Also the second doubt i had was whether i could use a relative or a friend's PAN to withdraw my money? Thanks
Your in India? I think it was India that required that of Paypal so I'm guessing that's it. Is it an income tax or a VAT? In the USA you'd pay income tax on $800. You'd need your receipt to back up your deduction. The way it is done in the USA would be to report the 1000 as income and the expense of $200 leaving a net income of $800. If you're some where else, I have no idea but it probably works something like that.
only the profit needs to be taxed. talk to an auditor. there are so many online, caclubindia is a good place to look for one. pay them a small fees and they will do your returns for you as all of them are experienced with paypal and online stuff. if you go to a local auditor he might ask you what is paypal and say absurd things and confuse you and rip you of more money
You'd obviously be paying tax on profit, not sales. If you were running a business that had a low profit margin and paid a tax rate on sales that happened to be greater than your profit margin, there would be no sense in continuing its operations.
Do everybody must pay taxes ? Is it mandatory in India ? What can happen, if someone don't pay taxes ?
Ever heard about IT raids happening , its for those who dont pay tax or maybe not fully , though I doubt much would happen to anyone if he isn't earning much , IT people usually go for the big fishes.
Absolutely Profit of the business needs to be taxed,the many taxes are available for corporate likes E-filing Taxes Returns.
I don't know if you can or can't, but your shouldn't use someone else's PAN details. Tax authorities do scrutinize transactions for smaller businesses from time to time. If ever they get a hint that your are doing something to avoid taxes, especially operating a business (doing transactions) on someone else's name, they will make hell out of your life. A small business owner in my area was caught avoiding taxes. The amount wasn't big, but he was caught. He pays all his taxes now, but still the IT guys scrutinize his accounts every 2-3 years, which obliviously is a big headache for him.