If the skilled receipts of an individual are greater than Rs. 50 Lakhs – the good thing about Presumptive Tax underneath Part 44ADA can’t be taken. In such a case, the particular person can be required to organize a Revenue & Loss Account and Stability Sheet in addition to get his audit carried out by a practising Chartered Accountant.
Compliances to be performed in case the Skilled Earnings is greater than Rs. 50 Lakhs
If the Skilled Receipts is greater than Rs. 50 Lakhs, the next compliances should be taken care of:-
- Preparation of Books of Accounts together with Stability Sheet and Revenue & Loss A/c
If the skilled receipts of an individual exceed Rs. 50 Lakhs in any monetary 12 months, he’s required to organize correct books of accounts together with Stability Sheet and Revenue & Loss A/c and use ITR 3 kind to file his Earnings Tax Return.
- Audit underneath Part 44AB by a Chartered Accountant
Because the annual receipts are greater than Rs. 50 Lakhs, he would even be required to get an Earnings Tax Audit carried out by a practising Chartered Accountant. The CA will confirm all of the info and verify copy of all invoices and accordingly put together the Audit Report which can also be required to be submitted together with the Earnings Tax Return.
- TDS Deduction on Funds
Because the annual receipts are greater than Rs. 50 Lakhs, TDS would even be required to be deducted on bills. For the aim of deducting and depositing the TDS, the particular person would even be required to get hold of a TAN No.
The above are the compliances to be performed underneath the Earnings Tax Act. Along with the above talked about compliances, the particular person can be required to do GST Compliances in addition to the receipts are greater than Rs. 20 Lakhs p.a.
Computation of Earnings and Tax levied thereon
The Earnings on this case wouldn’t be computed on presumptive foundation however can be computed on precise foundation i.e.
Earnings = Receipts – Bills – Depreciation
To be eligible to assert bills and depreciation, the particular person can be required to make a copy of all bills.
Publish the computation of Earnings, Earnings Tax can be levied on this revenue as per the Earnings Tax Slab charges and the very best slab charge of 30% will get relevant.
Methods to Save Taxes on such Earnings
The particular person may declare the good thing about the next deductions i.e.
- Deduction for House Mortgage
- Deductions underneath Part 80C
- Deductions for Training Mortgage
- Deductions for Well being Insurance coverage
The whole checklist of deductions which will be claimed are talked about right here – Checklist of Earnings Tax Deductions
Professional Tip: Even after claiming all bills in addition to the good thing about deductions, the revenue tax usually seems to be abnormally excessive. To avoid wasting out on taxes, good individuals have began creating entities in Tax Havens like Dubai and pay Zero Tax on their Earnings. Refer: Tax Advantages of Creating an Entity in Dubai