Navigating Income Reporting: Should I Declare My Consultant Fees as Salary?

Dear All,

I have been working in a recruitment firm from December 2007 to March 2008. Then, from April 2008, I have started working from home for them. I have been achieving the targets and receiving 50,000 per month as a consultant. Now, from November 2008, I have joined a company and am receiving 75,000 as a salary.

Do I need to show my previous income as salary income to this company, or should I state that it was consultant fees and I'll later calculate and directly submit my taxes?

URGENT
Please Guide

Dear Badlu,

I have a good qualification as an MBA in HR. I was earlier working with a reputable company in a generalist HR role. I had to take a break because I had delivered a child. Now, since November, I have been working with an MNC as an HR Manager. Kindly help me in clearing my doubts; my figures are absolutely correct.

Thank you.

Ask your present company to deduct TDS.

Your past earnings are recorded as payment against services through your bank account, etc. Then it's recorded as your earnings for which you have to explain the amount exceeding income tax operated by a particular bank account. It depends on how payments were made on record or on vouchers and whether your PAN number was used for payment, etc.

Badlu

Dear,

It's okay. As you were earlier getting 50k per month, that was not your salary, and for that, the earlier firm will not issue you Form 16. If it is a professional fee, then they might have deducted your TDS. If not, you can do one thing: show it as a professional fee and deposit the tax on your own. However, consulting a CA in this regard would be better.

Thanks,
J.S. Malik

Thanks a ton, that means I should say that my present company should deduct the TDS from the salary of this present company only. & om my previous earnings..this is my duty to pay tax for. Thanks for replying.

One more query I have: we are a subsidiary of a foreign MNC, and we have only 6 employees on board. We are a three-month-old company and we paid the first salary check on 1st of January and deducted the PF from it. However, we have not applied to PF yet. We'll be applying soon. Can we submit this amount in the account then?

Presently, as you have only 6 employees, you do not need to deduct PF from the salary. You can complete the registration process first and then begin deducting PF, provided the number of employees does not exceed 10 for a "factory" establishment and 20 in any other case.

Thanks,
Prashant

Dear,

The required strength is 20 irrespective of factory or establishment in the case of PF. However, you can opt for voluntary PF and deposit the same.

Thanks,
JS Malik:icon1:

Hi,

Congratulations on the new assignment. Unless your earlier earnings were all routed through the bank, you can always avoid showing them. However, to be on the safer side, it's better to consult your C.A. and do that immediately.

Regards,
Kalyan Bhose
09230563604
rps.kolkata@gmail.com

Hi Rakhi,

Congratulations on your achievement. I need a little guidance from you. I hope you don't mind providing me with the same. I have completed PGD in HRD and joined a company as a recruiter. I work from home. I would like to know how you manage to achieve the targets. Which job portals do you use?

Regards,
Priya
priyaprincess.kumari@gmail.com

Dear All,

I have been working in a recruitment firm from December '07 to March '08, and then from April '08, I have started working from home for them. I have been achieving the targets and earning 50,000 per month as a consultant. Now, from November '08, I have joined a company and am earning 75,000 as a salary. Do I need to show my previous income as salary income to this company, or should I say that it was consultant fees, and I'll later calculate and directly submit my taxes.

URGENT
Please Guide

Hi Rakhi,

Is it true that you are being paid through work from home as a consultant? I would also be interested in a similar kind of profile. Actually, I am married, and now I need to take a break to plan our family. So, I would be interested in the profile mentioned by you.

I would be grateful if you could provide me with the details at my personal email address - supriya_india2001@yahoo.com.

I am also working as a Senior Executive in HR in the chemical industry and am looking for a change. Please help me.

Thank you,
Supriya

If you have already deducted the PF amount from the salary of the personnel, then you can submit the amount deducted along with the company's share. Please provide the name and address of your company and indicate the registration status A/F.

Regards,
Yogendra

If your previous company has provided you with any letters, such as a retainer letter, you can use these as proof of your income. You can also discuss that the nature of your work was such that you were working from home.

Regards,
Mahesh

Dear Rakhishahgupta,

If you had been appointed as a consultant, the TDS applicable is 10.3% (considerably lower than that of regular employees). You will be issued Form 16A (TDS certificate) at the end of the financial year from the Company/Firm that you have been serving. (You can file your returns and claim a refund of excess TDS deducted).

If you have now transitioned into regular employment, you would need to furnish details of your previous earnings (in consulting) during the relevant financial year. Only then can your existing employer calculate the amount of tax on your salary of 75K correctly. Alternatively, if you do not provide them with your earning details, they will have to presume that you "officially" have no earnings before joining them. Your tax deduction may then be considerably lower (although, with the salary quoted by you, you will automatically fall into the highest slab bracket of income tax, i.e., 33.99% including surcharge & education cess). Remember to also provide your investment details for appropriate tax exemptions for your benefit.

If, however, your consultant earnings were not based on any paper agreement/contractual terms in writing and you were paid other than officially declared income, you may well escape tax (though it is illegal).

Rahul

Dear All,

I have been working in a recruitment firm from Dec 07 to March 08, then from April 08, I have started working from home for them. I have been achieving the targets and getting 50,000 per month as a consultant. Now from Nov. 08, I have joined a company and am receiving 75 thousand as salary. Do I need to show my previous income as salary income to this company, or should I say that it was a consultant fee and I'll later calculate and directly submit my taxes.

URGENT

Please Guide