Any amount which has been paid for the purpose of earning
revenue is allowed to be deducted as an expense. A few examples of the
expenses allowed are as follows:-
- Domain Hosting Expense, Domain Purchase Expense, Blog Designing Expense etc
- Rent Expense
- Electricity Expense/ Telephone Expense/ Internet Expense/ Water Expense
- Salary to Employees
- Payment to Freelance Consultants
- Petrol/ Diesel Expenses
- Any other expense incurred for the purpose of earning Revenue
Here, you are requested to note that only those expenses incurred for the purpose of earning Revenue are allowed to be deducted as an expense.
For e.g.: If you invite a client for a meeting in a 5 star hotel, the
payment made to the 5 star hotel is allowed to be deducted as an expense
as this meeting would help you in increasing your business and would
help you earn extra income. It is irrelevant whether you get extra
business from this meeting or not, the point to be taken into account is
that this expense was incurred for the purpose of gaining extra
business.
But, if you go to a 5 Star Hotel for your personal purpose
and not for business purpose, it would not be allowed to be deducted as
an expense.
For the purpose of claiming these expenses, you are also
required to provide proof of such expenses. Therefore, you are required
to maintain a file showing bills of all the expenses incurred.
Depreciation on Assets
For the purpose of earning revenue, bloggers also purchase
some assets. So for the purpose of earning revenue, if you’ve purchased
any assets like mobile/ laptop/ car/ office furniture etc you are also
allowed to reduce this form of expense incurred for the computation of
total income.
However, the benefit arising from the expense incurred on
the above mentioned assets would be arising for more than 1 year as
these assets usually have a life span of more than 1 year. As the
benefit would be arising for more than 1 year, the expense incurred
shall also be attributed to more than 1 year.
In such cases where the expense has been incurred for
purchase of any Asset, you are not allowed to claim the whole expense at
one go. The total expenditure incurred for purchasing the asset is
allocated over the life of the asset and you are allowed to claim this
expenditure proportionately over the life of the asset. This can be
explained with the help of an example below:-
For e.g.: If you purchase a laptop for Rs. 30,000 and the
expected life of the laptop is 3 years, you cannot claim the whole Rs.
30,000 as an expense in one year as the life of the Asset is more than 1
year and this laptop would be giving you benefits for more than 1 year.
In this case you would only be allowed to claim Rs. 10,000 (i.e. Rs.
30,000/3)
This method of proportionately claiming an expense based on the life of the Asset is called depreciation of asset. You are required to show the proof of expenditures made on purchase of Assets by showing requisite bills for the same.
Please Note: The Individual cannot himself decide the life
of an asset and the Govt has already pre-defined the life of all the
Assets.
Deductions allowed for Specified Investments
To promote the habit of savings amongst taxpayers and to
channelize the resources in the right direction, the Govt also allows
for Deduction for amount invested in specified investments. If a
taxpayer makes an Investment in any of the Investment Options as
specified by the Govt., he shall be allowed to claim deduction for the
same. Income Tax would be levied on the amount so arrived after reducing
the Deductions from the Gross Total Income.
Deductions for Investments made in specified Instruments
are allowed and the most popular forms of Investment for claiming
Deductions are Mutual Funds, PPF Accounts, Life Insurance Premium,
Health Insurance Premium etc. The whole lists of Investments which are allowed to be claimed as a Deduction are given here.
Exemption from Payment of Income Tax
If the Total Taxable Income after deducting all expenses,
depreciation & deductions allowed is less than the minimum income
which is chargeable to tax, the individual is not mandatorily required
to file his income tax return.
As per the current Income Tax Slabs, no tax is payable if
the Total Taxable Income of an Individual is less than Rs. 2,00,000.
Therefore after deducting everything stated above, if the Total Taxable
Income is less than Rs. 2,00,000 he is not mandatorily required to file
his Income Tax Return and it is optional for him to file his Income Tax
Return.
In cases wherein it is optional for the taxpayer to file
his income tax return and he still files his Income Tax Return, in such
cases he will file an Income Tax Return stating that the Tax payable by
him is Nil.
PAN Card for filing Income Tax Return and Payment of Taxes
In India, there are many people by the same name. Let’s
take the case of Harsh Agrawal. There are many people in India by the
name of Harsh Agrawal. So if Harsh Agrawal goes and pays his Income Tax,
how would the govt come to know which Harsh Agrawal has paid the tax?
So as to avoid this confusion, the govt issues a PAN Card to every taxpayer. PAN Card is a unique no allotted to every taxpayer.
Only 1 PAN Card No is issued per person and for each Harsh Agrawal in
this country, the PAN Card No would be different and it is through the
PAN Card No that the govt would come to know which Harsh Agarwal has
paid his Income Tax.
Every taxpayer has to apply for a PAN card no and this
application can be made online as well. This is a one-time process and
the PAN card no allotted to you would stay the same throughout your
lifetime. Applying for pan card is a fairly easy process and application
for the same can be made online as well as offline. The Charges for
applying for a PAN card are very nominal and are Rs. 96 only.
The request for applying for a PAN Card is required to be
made in Form 49A and online request for PAN Card No can be made through
the TIN Portal on the NSDL Website. You are requested to note here that without PAN Card No. you cannot pay Income Tax.
As against popular belief, I would here also like to
clarify that it’s not necessary for you to be 18 years of age to be
applying for a PAN Card. You can apply for a PAN Card even before you are 18 years of age
and this income would be counted as your income and not your parents
income as you are earning this income out of your own skill.
Due Date for Payment of Income Tax
Every taxpayer is required to make payment of income tax
during the year itself in which the income is earned. He is required to
make the payment in instalments during the Year if the total tax payable
during the year is more than Rs. 10,000.