Q: Hey there, I am a product designer and I recently started to freelance while also having a full time job. And I have started to collect payments through Paypal. My turnover as of now is less than 20 lakhs. Should I register for GSTIN and how does this affect my tax returns?
A: GST registration becomes mandatory only when your turnover surpasses the 20 lakh threshold.
It is crucial to note that income tax and GST are distinct entities, and changes in one do not impact the other. When it comes to income tax, you have the option to choose the simplified 44ADA provisions, declaring 50 percent profit directly.
Alternatively, you can opt for the regular business approach, preparing detailed financials for a more extensive scope of tax planning.
Q: My mother’s PAN has been inoperative due to non-linkage of PAN- Aadhar and a tds on fixed deposit was deducted at 20%. Now, we have linked here PAN- Aadhar and it is showing as linked on her income tax portal account. My question is – will this deducted tds be claimed back while filing return since her income isn’t in taxable range?
A: As long as your Annual Information Statement ( AIS ) or Form 26AS reflects the deduction of Tax at Source and if you are not beyond the taxable threshold (regularly paying income tax), your mother can claim refund of the entire TDS amount by filing income tax return within the prescribed time limits.
In simple terms, Total Income Tax Liability – TDS = Refund or Payable Tax
Q: I am below 18. I buy Clash of Clans ( COC ) Game accounts at a low price and sell them at higher price making some profit in this transaction in India. How can I file ITR in this situation? I get the money in my mother’s account. Please enlighten me.
A: You can get a PAN number without having to attain 18 years of age. Many individuals commonly think that acquiring a Permanent Account Number ( PAN ) is restricted to those aged 18 and above.
Nevertheless, it’s important to note that the Income Tax Department has not stipulated any age limitations for obtaining a PAN card. Thus, you can file Income Tax Return( ITR ) by obtaining a PAN Card, if your income crosses the basic exemption limit of Rs. 2,50,000/-.
If your income exceeds Rs. 1500/- per year, your income can be clubbed with your mother’s income and reflected in her returns. But if you cross the basic exemption limit, you are liable to file ITR in your own name and PAN Number.
Q: Will there be tax during withdrawal from the Employee Provident Fund ( EPF )?
A: As per PPF rules and provisions, any kind of money received from PPF account is completely tax exempt. It can be withdrawn money amount, PPF maturity amount or PPF account closure amount.
Premature closure of the PPF account is allowed only 5 financial years after the account is opened. It is only allowed on three grounds: Life-threatening ailment or serious diseases faced by account holder/spouse/children.
There are the following ways where individuals can avoid TDS implications on EPF withdrawal such as:
If you do not withdraw any amount from your EPF account during the 5 continuous years of service duration. In that case, the TDS application will not be applicable on withdrawal made after 5 years of service.
If the amount of EPF withdrawal is less than the ₹50,000/- then no TDS will be applicable.
Upon changing jobs, try not to withdraw the amount from the EPF account and transfer the fund into a new account to avoid TDS implications.
Read More: New Rule on Tax Benefits on EPF Contributions: All You Need to Know
Q: So, I have invested in a mutual fund plan on Groww, it’s not a SIP but I’ve taken money out of it and re-invested several times. I started this last year probably so do I need to pay taxes on it or does it get deducted on its own?
It’s an equity fund and the LTCG is around Rs. XXXXX and STCG around Rs. XXXX. Where do I declare this and will I have to pay taxes on it?
A: In India, gains from mutual funds, whether they are equity or debt funds, can be categorized as either Long-Term Capital Gains (LTCG) or Short-Term Capital Gains (STCG), depending on the holding period.
If you hold your investments for more than one year, the gains are considered as LTCG and If the holding period is one year or less, gains are treated as STCG.
You need to declare your capital gains while filing your income tax return.
Declare LTCG and STCG separately in the appropriate sections of your income tax return form.
Payment of taxes are not automatically deducted, and you may need to calculate the tax liability and pay it during the income tax filing.
Consult a Finance and Tax Professional like a Chartered Accountant (CA) or a Tax Practitioner for proper filing of your ITR and financial planning for upcoming financial years.
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