Thread by @manansmehta5

A Comprehensive Guide on Tax for Freelancers

A thread..

#incometaxindia #44ADA #GST

Part 1 - GST v. Income tax

First thing you need to understand is that Income Tax and GST are 2 completely different Acts and tax different things. Let's illustrate quickly with a simplified example.

1/n

Example - GST v Income Tax

Mr. India earns INR 1 crore by selling services to Indian parties. This is professional income for Mr. India. GST on these services applies at 18%.

2/n

GST

Mr. India will collect the following amount from his clients:

This INR 18,00,000 of GST collected will be paid to the Government. Accordingly, GST is an indirect tax - the clients bear the burden of this amount.

3/n

Note - In some cases, practically - you may end up paying GST out of your pocket. We'll explain that in the next threads.

4/n

Income Tax

Mr. India will be liable to pay income tax on this INR 1 crore at slab rates. This is a tax on your income - a Direct Tax. This goes out of your pocket.

5/n

thegalacticadvisors.com/tax-rates-indi…

Obviously, there's more to both of the Acts (which we will explain below), but this should help you understand the basic difference between the 2 types of taxes you need to worry about.

6/n

That's it for part 1. Follow @manansmehta5 for more!

#tax #remoteIndian #freelanceindia

Full article available below:
thegalacticadvisors.com/post/comprehen…