5 Business Taxes You Probably Didn’t Know About

Let’s examine 5 taxes you probably didn’t know about. For all of these services it’s quite easy to think that you don’t have to pay taxes as the earnings are sent to you before tax deduction and some earnings are made in cash. These include:

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  1. Freelancing

Based on Indian tax laws, any work which requires a skill gets taxed under Profits and Gains of Business and Professions. As a freelancer, if your tax liability in a financial year exceed Rs. 10,000, you’re required to pay taxes every quarter. This is known as Advance Tax. 

Freelancers who earn less than 50 lakhs in a year can use the Presumptive Taxation method which is a 50% rate. Those with incomes up to Rs. 2.5 lakh are not supposed to pay taxes, whereas income ranging between 2.5 lakhs to 5 lakhs are taxed at a 10% rate, 5 to 10 lakhs at 20%, while those above 10 lakhs at a 30% rate. Check this article for tips to ensure that your finances as a freelance translator are in top shape and to avoid having debt after paying tax.

As a freelancer, you’re required to use ITR Form IV to file your taxes. Where you rely on the Presumptive Taxation Method, the ITR Form 4S should be used.

  1. Amazon retailing

When you sell on Amazon, regardless of your earnings, you’re required to pay a Goods and Services Tax. The GST law requires every online seller to register for GST and file monthly returns. 

This tax does away with other taxes such as VAT and state taxes. However, retailers involved in the sale of only animal feed, the Indian flag, Khadi yarn, and plastic bangles need not pay GST as these goods are not taxed. 

For retailers whose Amazon listings are Easy Ship or Self Ship, they can rely on the Amazon invoicing tool which automatically generates a GST-compliant invoice and adds the correct Goods and Service Tax rate for that product. 

As a seller, you must file the GSTR-1 form monthly which reports invoices, sales, and the GST you charged buyers. You can also include sales returns to the form, which allows you to receive a credit for the tax you paid.

  1. Online lottery winnings

All online lottery winnings above ₹10,000 are subject to a 30% flat tax. But if winnings are less than ₹10,000, no tax is required to be paid. However, when the winner files Income Tax returns for the year, they must indicate the amount won. 

The taxes on your online lottery winnings get easily deducted before you receive your winnings when you play at a state-owned lottery or one which operates with an Indian license. However, for online lottery players using offshore sites, winnings get cashed out in full without any taxes deducted. It is easy to think that you don’t have to pay taxes on these, but legally you are supposed to declare and pay your taxes.

 

  1. AirBnB business

AirBnB operators are required to pay taxes as either income from house property or (when it’s one or two properties let out), while letting out multiple properties falls under business and profession. 

Tax rates on AirBnB are based on the average nightly rate of the reservation. Tax rates for AirBnB include 0% for ₹1000 below, 12% on ₹1000-7500 and 18% from ₹7501 above.

 

  1. Private tutoring

Home Tutors are required to keep records of their receipts with dates, months and the amounts. For tutors with an income of Rs.2,50,000+ or whose total receipts exceed Rs.25,00,000 in all preceding 3 years, such a tutor is required to maintain an account to assist an Assessing officer to calculate the taxable income based on the Income Tax Act.

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