A YouTuber was recently raided by the income tax (I-T) department that recovered ₹24 lakh during the raid. It was alleged that he had accumulated earnings amounting to ₹1 crore by making videos.
When tax payers around the country are scurrying around to meet the July 31 deadline of filing income tax return, some salaried tax payers are accustomed to keeping their income earned from ‘other sources’ away from the taxman’s glare.
For instance, when a tax payer who has (say) ₹20 lakh as salaried income, earns ₹3 lakh through a side hustle, he could perhaps refrain from declaring it while filing the income tax return.
But what if this ‘extra’ income is more than ₹50 lakh or ₹1 crore? Then the dynamics do change. There are some tax provisions that kick in as the gross receipts touch a threshold.
Let us take a look at some of these income tax provisions that you should know when you carry out a side hustle.
Auditing of accounts: When your total income is more than ₹50 lakh, it is incumbent upon you to get your accounts audited.
Mumbai-based chartered accountant Chirag Chauhan from CA Chauhan & Company, says, “When a professional is earning more than ₹50 lakh, s/he is liable to get his accounts audited.”
Getting GST number: Providing service of any kind online or offline is covered under the GST (Goods and Services Tax) law.
Any professional who is rendering services of any kind should apply for a GST number when the annual gross receipts are more than ₹20 lakh.
Deepak Aggarwal, a Delhi-based chartered accountant, explains, “A professional with gross receipts of more than ₹20 lakh is supposed to get a GST number.”
“Most young people take these rules casually but they must consult a tax expert before they file their income tax return to be on the right side of law,” says Aggarwal.
Presumptive income: Professionals can calculate their income under presumptive taxation when their gross receipts or turnover does not exceed ₹50 lakh.
This provision spares professionals from maintenance of books of accounts and getting the accounts audited.
To become eligible for presumptive taxation, one should be engaged in following professions: legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration or other professions notified by CBDT.