Every Citizen is liable to pay taxes if he/she starts earning income. Hence, an income-generating person is termed as assessing wherein under Income Tax act, 1961, some amount of money is payable. Under which, Assessee- Self-employed Individual is the one who doesn’t receive fixed income from the organization.
The income earned by self-employed professionals comes under the cadre” income from Business/profession”. Let’s look into the tax planning for self-employed professionals.
FILING OF TAXES FOR SELF EMPLOYED:
As mentioned above, the income from Business or profession earned by Self-employed can be filed in the below-mentioned ways.
- Presumptive taxation is a method of calculation under which income is calculated without claiming any expenses or deductions done by the Business or the profession.
- The other method of filing is based on the real profit post claiming the actual expenses during the Business/profession course based on the revenue generated.
TAX FILING-PRESUMPTIVE SCHEME:
The concept of presumptive taxation is quite new for self-employed professionals and now let’s look in detail about this.
- The scheme applies to all self-employed professionals.
- If a particular self-employed assessee overall gross receipts are below Rs.50 lakhs for the financial year, this scheme is applicable.
- In case if a person is running a business and the income is below and around Rs.2 crore for the financial year, the scheme is applicable under Section 44AD of the Income Tax Act.
- There are certain percentages calculated based on the income generated and the taxable income generated from Business/profession.
The ITR form used by self-employed professionals depends on the type of tax they file. If tax is getting filed under presumptive taxation, ITR-4 needs to be submitted. In case presumptive taxation is not adopted, ITR-3 needs to be used. There are different tax slabs for all the self-employed professionals, it gets different based on the income and revenue generated.
Therefore, the above-mentioned factors help in knowing about the ways of tax planning/exemption for self-employed professionals.