Detailed Guide on Income Tax for Indian Bloggers : A new profession that has come up in the recent few years are blogging & freelancing. The major sources of income from this profession are as listed below.
1) Advertisements
2) Affiliate Sales
3) Services like Blog Consultancy, Blog Designing, SEO Services, etc.
The best thing about this profession is that it doesn’t require any age limit.The number of Indian freelancers and bloggers is on a steep rise with more and more growth of the internet. While this profession gives an individual really great opportunities to earn, taxation is always a headache. When one earns any income from any profession, which requires the use of his/her skills, which may be intellectual or physical skill, such income will be taxed under the head called ‘ Profits & Gains of Business & Profession’. In this article, I will try to give a brief overview of the Income Tax aspect of the profession of blogging & freelancing in India.
Computation Of Income Tax In India
A person who earns income from any source is liable to pay tax on the some at the prescribed rates to the earning income from any source is liable to pay income tax as per the tax rates prescribed by the government of India. Income Tax is not charged on the total revenue which is earned but the same is payable on the total income earned. Total revenue is the gross amount received by the individual and total income is referred to the amount earned after depreciation and payment of expenses incurred so as to earn the Revenue by him/her.
Allowed Expenses For Deduction While Computing Income Tax For Bloggers
Amounts which have been paid so as to earn revenue are allowed for deduction as expenses. Here is a list of a few examples of the allowable expenses.
1) Domain hosting expense, domain purchase expense, blog designing expense, etc.
2) Rent expense.
3) Electricity expense/ telephone expense/ internet expense/ water expense.
4) Salary to employees.
5) Payment to freelance consultants.
6) Petrol/ diesel expenses.
7) Depreciation expenses of mobile/ computer/ car/ furniture, etc.
8) Any other expense incurred for earning revenue.
In order to claim these expenses, a professional is also required to produce proof of such expenses. So he/she is required to maintain a folder or file that shows invoices of all the expenses incurred.
Information About Payment of Advance Tax
If an individual’s tax liability in a financial year exceeds Rs.10,000 he/she may have to make payment of ‘Advance Tax’. This means that he/she has to pay income tax at frequent intervals (as prescribed by the income tax department) instead of paying a lump sum amount during the end of the year. To calculate and pay advance tax, one may have to make an estimation of his/her expenses and income on a reasonable basis.
Exemption From Payment Of Income Tax
If the total taxable income after deduction of all expenses & deductions allowed falls short of the minimum income that is chargeable to tax, it is not compulsory for the individual to file his/her income tax return. Wherever it is optional for the individual to file his/her income tax return and he/she still files his/her income tax return, he/she has to mention in such income tax return that the income tax payable by him/her is nil.
Pan Card For Filing Income Tax Return And Payment Of Taxes
Every taxpayer has to make application for getting a PAN card. One can apply for a PAN Card in Form 49A and the online request for the PAN Card No can be made through the TIN Portal on the NSDL website. In order to file an income tax return and pay income tax, an individual is mandatorily required to have a PAN Card. It is not compulsory for one to be 18 years old to apply for a PAN Card. One can even apply before turning 18 and this income will be counted as his/her income and not the income of his/her parents as the individual is earning such income out of his/her own skill.
Indication While Filling Income Tax Return (For Bloggers & Freelancers of India)
An Indian blogger & freelancer is required to submit his/her income tax return in the ITR-4 form at the end of a financial year. The income tax return should indicate the following things:-
1) Revenues earned and their sources.
2) Expenditures incurred.
3) Depreciation claimed on assets.
4) Investments made for which Deduction have been claimed.
5) Total taxes paid including the advance tax paid or TDS deducted (if any).
If there is any delay in payment of income tax and filing of income tax return, it will enforce the levy of interest and penalty for such delay. By mistake, if a person has paid excess income tax, it is possible for him/her to claim a refund of the excess tax paid.