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Computing Freelancer Total Taxable Income

Computing Freelancer Total Taxable Income: Meet Xyz again!

In my last blog we met Xyz and understood all about Expenses of a Freelancer and how to compute Income or Net Profit of a Freelancer. In today’s blog, we will look at calculating Rishabh’s Total Taxable Income.

Xyz’s freelancing income is Rs 5,17,400. But how do we arrive at his total taxable income? Xyz’s total income is the sum of his income under all heads. The heads of Income are –

  • Income from Salaries– This includes any income of salary or other payments received by virtue of an employment. Xyz’s one month’s salary of Rs 52,000 was credited to his account and PF of Rs 1,200 and TDS of Rs 2,000 was also deducted before he quit his job at the end of April 2014.
  • Income from House Property– Xyz owns a one bedroom apartment and has given it on rent to 2 students who pay him Rs 15,000 in total. He also paid property tax of Rs 15,000 to the local authorities. From total rental income from the house, property tax paid is allowed to be deducted. Additionally a standard deduction of 30% is allowed on the net house property income (after deducting property tax paid).
  • Income from Freelancing or Business & Profession– Income from freelancing (business or profession) as calculated in my last blog is Rs 5,17,400 for Xyz.
  • Income from Capital Gains– income from sale of a capital asset. Xyz did not sell any capital asset in the financial year 2014-15.
  • Income from Other Smyces– Income from interest on savings account, interest from fixed deposits – this is the residual head of income, incomes which cannot be taxed under any other head of income are taxed here. Xyz has a fixed deposit on which he earned an interest of Rs 12,000. Additional he earned an interest of Rs 7,800 on his savings account.

With the details received from Xyz – this is how his Total Taxable Income is calculated.

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Computing Freelancer Total Taxable Income

Total Taxable Income of Xyz is Rs 704,700. Do watch out for my next blog – we will help Xyz calculate his total tax payable.

Computing Freelancer Total Taxable Income

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Computing Freelancer Total Taxable Income

 

Computing Freelancer Total Taxable Income

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