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Salary Income Tax
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Tax Planning For Professionals

Profession involves the idea of an occupation, requiring purely Intellectual skill or manual skill controlled by the intellectual skill of operator. Profession includes Accountancy, Authorised Representatives, Company secretary, Doctor and engineers etc.,

Consultancy Income received will also be taxable under the head of Income From Business/Profession and Form 16A provides the consultancy income received during the previous year.

Income from Consultancy Fee is calculated after deducting all deductible business expenditure as per Income Tax Act.

Income and Expenditure Account
Expenditure Amt (Rs.) Income Amt (Rs.)

To Salary to Staff
To Books & Periodicals
To Depreciation
To Conveyance
To Internet Charges
To Petrol Expenses
To Printing & Stationery
To Telephone Expenses
To Vehicle Maintenance

xxx
xxx
xxx
xxx
xxx
xxx
xxx
 xxx
xxx

By Consultancy Fee
(As Per Form 16A)
By Commission

Xxx
Xxx

To Excess of Income
Over Expenditure

Xxx

 

 

TOTAL

XXX

TOTAL

XXX


Capital Account 
Liabilities Amt (Rs.) Assets Amt (Rs.)

To Drawings
To Income Tax Paid
To Life Insurance
To Balance c/d

Xxx
xxx
xxx
xxx

By Balance b/d
By Income From Profession
By Dividend Income
By Bank Interest

xxx
xxx
xxx
xxx

TOTAL

XXX

TOTAL

XXX

Balance Sheet

Liabilities Amt (Rs.) Assets Amt (Rs.)

Capital Account
Secured Loan
Unsecured Loan

Xxx
xxx
xxx

Fixed Assets:
Motor Car
Furniture
Deposits
Bank Account
Cash-in-Hand

Xxx
Xxx
xxx
 xxx
xxx
xxx

TOTAL

XXX

TOTAL

XXX

Computation of Income from Profession:

Particulars Amt (Rs.) Amt (Rs.)

 Excess of Income Over Expenditure
(As Per Income & Expenditure Account)

 

XXX

Add: Inadmissible Expenses

 

Xxx

Less: Admissible Expenses

 

(Xxx)

Income under the head Income from Profession

 

Xxx

MAINTENANCE OF SPECIFIED BOOKS OF ACCOUNTS BY PERSON [SECTION 44AA]
Under the provisions of this section the assessees carrying on following Specified List of Profession are required to maintain Specified books of accounts and other related documents.
Such Specified Professions are:

  • Legal;
  • Medical; 
  • Engineering 
  • Architectural profession;
  • Accountancy profession; 
  • Technical consultancy; 
  • Interior Decoration; 
  • Any Other profession as notified by the Board (CBDT) in the Official Gazette being: 
  • Authorized Representative; 
  • Film Artist;
  • Company Secretary;
  • Information Technology

Conditions:

  • If the Gross Receipts of Specified Professions Exceeds Rs. 1, 50,000/- in the any of the immediately three previous years they should be maintained books of accounts for 6 year from the end of relevant assessment year.
  • If the Gross Receipts of Other than Specified Professions Exceeds Rs. 1,20,000/- in the any of the immediately three previous years they should be maintained books of accounts for 6 year from the end of relevant assessment year.

PLEASE NOTE:

  • Specified Books of Accounts is defined under Rule 6F to include the following:-
    - Cash book;
    - Journal (if the accounts are maintained according to the mercantile system of accounting);
    - Ledger;
    - Original bills in respect of expenditure incurred
 
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