TaxSavvy

TaxSavvy for freelancer, above ₹75 L

Above ₹75 L, presumptive ends. Books, audit and maybe an LLP.

Receipts above ₹75 L a year

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  • Business or professional income return, ITR-3 (including F&O and intraday)
  • VCFO Lite onboarding
  • LLP incorporation, RUN-LLP and FiLLiP+ govt fee and stamp duty at actuals
  • Compliance Pack onboarding

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  • Bank statement
  • Invoices
  • Last year's accounts
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Facts, Provisions and law, Analysis, Conclusion.

  • Tax Audit Threshold, Section 63 (old 44AB): Who Must Get Audited?
    Facts
    Tax audit under Section 63, Income-tax Act 2025 (old Sec 44AB) is one of the most misunderstood obligations in India. Most small businesses don't know they're required to get audited. And many audit-eligible businesses pay ₹1.5L penalty for missing it. Know the thresholds, they changed significantly in 2021 with higher digital cash thresholds.
    Provisions and law
    Sec 63 (old 44AB(a)); Sec 63 (old 44AB(b)); Sec 63 (old 44AB(e)); Sec 446 (old 271B); Form 26 (old Form 3CD)
    Analysis
    Current tax audit threshold matrix: Business (goods/services): ₹1Cr OR ₹10Cr if 95%+ digital transactions. Profession (any): ₹50L OR ₹75L if 95%+ digital. Sec 58 (old Sec 44AD) opting but declaring < 8%/6%: audit regardless of turnover. Sec 58 (old Sec 44ADA) opting but declaring < 50%: audit regardless of receipts. What "95% digital transactions" means: Both receipts (money coming in) and payments (money going out) must be ≥ 95% through banking/digital channels. One large cash payment or receipt can disqualify you from the higher threshold. Example: ₹9.5Cr turnover, but paid rent in cash for 1 month (₹30K): that cash payment is 0.03% of total, likely within 5% cash. Check carefully. The Sec 58 (old Sec 44AD / 44ADA) trap: Business with ₹80L turnover opts for Sec 58 (old Sec 44AD; 8% presumptive = ₹6.4L income). Owner says actual profit is only ₹3L (37% of turnover, less than 8%). Two choices: (1) Declare ₹6.4L (8%) as presumptive, no audit.
    Conclusion
    • Check turnover/gross receipts for the FY, compare with threshold
    • Business: ≥ ₹1Cr (or ₹10Cr if 95%+ digital) → mandatory audit
    • Professional: ≥ ₹50L (or ₹75L if 95%+ digital) → mandatory audit
    • If Sec 58 (old Sec 44AD/44ADA): are you declaring the minimum (8% / 50%)? If lower → mandatory audit
    Read the full answer
  • Pvt Ltd vs LLP vs OPC: which to choose and why
    Facts
    Pvt Ltd: Best for VC-fundable startups. Can issue equity (CCPS, CCD, options). Corporate tax 22% (Sec 200, Income-tax Act 2025, old Sec 115BAA) or 15% for new manufacturing (Sec 201, old Sec 115BAB). Compliance-heavy: ROC filings, board meetings, statutory audit mandatory.
    Provisions and law
    Companies Act 2013 | LLP Act 2008 | IT Act 1961, Sec 115BAB (now 201)
    Analysis
    LLP: Best for service businesses, CA firms, consulting. No dividend distribution tax. Partners pay tax at slab rate on their profit share. Cannot issue shares, VCs cannot invest. No statutory audit below ₹40L turnover / ₹25L capital. OPC (One Person Company): Solo founder, no intention to raise VC. Same compliance as Pvt Ltd but only one shareholder. Converts to Pvt Ltd when turnover exceeds ₹2Cr or paid-up capital exceeds ₹50L.
    Conclusion
    • You plan to raise external equity (angels, VCs, ESOP pool)
    • You want Sec 140 (old Sec 80-IAC) tax holiday (Pvt Ltd and LLP both qualify)
    • You have multiple co-founders with different equity stakes
    • You are building to sell, M&A exit requires Pvt Ltd structure
    Read the full answer
  • Who Must Pay Advance Tax
    Facts
    Advance tax is pay-as-you-earn for non-salaried income. Missing it costs 1% per month in interest. Most freelancers, investors, and business owners are unaware until they face a ₹20,000 to 80,000 interest bill at filing.
    Provisions and law
    Sec 207; Sec 208; Sec 209; Sec 424 (old 234B); Sec 425 (old 234C)
    Analysis
    Who is exempt: Senior citizens (60+ years) with NO business income are fully exempt from advance tax. Their entire liability is paid as self-assessment tax at filing. Important: senior citizen with rental income from property + business = NOT exempt. Salaried with only salary income: Employer deducts TDS monthly. If estimated TDS equals full liability, no advance tax needed. But if you have FD interest, MF dividends, or freelance income on the side, check if advance tax applies. Presumptive taxpayers (Sec 58, Income-tax Act 2025, old Sec 44AD/44ADA): Pay entire advance tax in ONE instalment by March 15. Skip quarterly, just one payment by March 15. LTCG/STCG, special rule: Capital gains arising after March 15, pay entire tax by March 31, no Sec 425 (old Sec 234C) interest. Capital gains arising in Q3? Pay tax in Q4 instalment, not retrospectively in Q3.
    Conclusion
    • Estimate total income from all sources for the financial year (April to March)
    • Reduce standard deduction (₹75K salaried) and all eligible deductions (Sec 123, 126 (old Sec 80C, 80D), etc.)
    • Compute tax on estimated taxable income using applicable regime and slabs
    • Deduct expected TDS for the year from this tax figure
    Read the full answer
  • Freelancer with Foreign Clients: Tax, GST, and FEMA Complete
    Facts
    India-based freelancer earning from US/UK/UAE clients: three compliance layers. Income Tax: declare foreign income, pay at slab rate. GST: export of services = zero-rated, but registration needed. FEMA: receive payment in USD via AD bank, convert within stipulated time. Get all three wrong and you have an IT notice, a GST notice, and an RBI violation.
    Provisions and law
    Sec 58 (old 44ADA); GST, Zero Rated Export; FEMA, EEFC; Sec 393 (old 195), No TDS
    Analysis
    GST myth: Many freelancers think they must charge 18% GST to foreign clients. Wrong. Export of services = zero-rated. Charge 0% GST. File LUT (Letter of Undertaking) once per year on GST portal. No GST collected from foreign client. No refund to claim. FEMA receipt deadline: Invoice raised March 1: payment must reach India by November 30 (9 months). If client delays: apply to RBI for extension. Funds beyond 9 months without RBI approval = FEMA violation. Currency conversion timing: Income recognized when received (not invoiced). Use RBI rate on date of receipt. If received in EEFC account: recognized when converted to INR. Keep EEFC account if you have USD expenses (cheaper than converting both ways). The new regime advantage for freelancers: Foreign income ₹30L → Sec 58, Income-tax Act 2025 (old Sec 44ADA): ₹15L taxable → new regime tax ≈ ₹2.1L. Old regime with Sec 123 (old Sec 80C): ₹13.5L taxable → tax ≈ ₹2.5L.
    Conclusion
    • Determine if profession is in Sec 58 (old Sec 44ADA) specified list (IT, consultant, designer, generally yes)
    • Open EEFC account at your bank for direct foreign currency receipt
    • File LUT (Letter of Undertaking) on GST portal before raising first foreign invoice
    • Raise invoice in USD to foreign client, zero GST charged
    Read the full answer

Above ₹75 L, presumptive ends. Books, audit and maybe an LLP.

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