Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: TDS :: cpt :: ACCOUNTING STANDARDS :: VAT RATES :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: empanelment
« News Headlines »
 ICAI to organise two-day international conference in Hyderabad
 Here's how to calculate tax payable on your capital gains
 Income Tax calculations for the financial year 2016-17
 CPE Events 17 October - 22 October 2016
 High Court raps I-T Department for wrong tax demand
  CBDT signs 5 advance pricing pacts with Indian taxpayers
 Finance ministry warns tax officials of action against GST protest
 Big changes for small units under GST
 Parliament’s winter session to begin on November 16 to expedite GST rollout
 Income-tax (27th Amendment) Rules, 2016 - 92/2016
 Announcement - Clarifications in Respect of MEF 2016-17

Filing return in case of part consultancy
July, 30th 2008

It is possible that a person might have worked with a particular organization as an employee for part of the financial year and as a consultant for the remaining part of the financial year.

For example, say for April to December 2007 the person has worked as an employee with the Company X and subsequently he left the employment and worked as an independent consultant with the same company.

Therefore, an issue arises how should the income received from the same organisation (here Company X) in different roles (first as an employee and then as a consultant) should be taken into account for filing the tax return?

The income received by an individual as an employee from Company X would be liable to tax under the head Salary Income. In respect of salary income, the employer is required to estimate the total salary income and deducted tax (TDS) as per applicable rates.

Generally, the entire tax required to be paid by an individual on his salary income is withheld by the employer. Therefore, broadly speaking, no further tax would be required to be paid by the individual in respect of his salary income.

In respect of the consultancy income received by the individual from Company X, the same is taxable under the head Profits and Gains of Business or Profession. The Company X is required to deduct tax at the prescribed rates on the consultancy income paid to the individual.

The consultancy income received by the individual should be considered as gross receipts and the individual shall be eligible to deduct expenditure incurred by him to earn such consultancy income eg, transportation costs, telephone and electricity charges, etc. The net income (ie, gross receipts less expenditure) is liable to tax.

In the instant case, in respect of consultancy income, the individual is required to pay advance tax on specified dates after taking into credit the tax deducted at source by the Company X as per the provisions of the Income Tax Act, 1961.

The individuals salary income and consultancy income would be added to arrive at his total income. Tax would then be computed on the total income. From such tax, the tax deducted on salary and TDS on consultancy income would be adjusted (reduced). Also, any advance tax paid by an individual, on his consultancy income, would also be adjusted (reduced) from the tax payable.

Finally, if there is any balance tax payable (ie total tax liability less tax deducted by company X on salary income and consultancy income and advance tax paid by the individual) then the same has to be deposited with the tax authorities before filing the tax return, along with interest, if any.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Portfolio

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions