Income from PayPal, is it Taxable ?

Hi,

I'm a Software Consultant. I get my Fees / Payments form my clients via PayPal. Then I withdraw the fund in any of my two Savings account (SBI or Axis).

Now my questions are:


  1. In which income category(as job) I actually fall ?
  2. Which form(ITR-1..4) should I fill-up for Income Tax Return ?
  3. In fiscal 2010-2011, my total withdrawn amount(PayPal to Banks) was Rs.3,20,000. So how much money will I show as my income and other categories too?
  4. How I can save maximum from tax? which ways you recommend for me? (I already have 6.5L FDs and a LIC of 4K premium/anm )

asked May 06 '11 at 19:01 by BlackJack 1111


First of all let me inform you that you may run into issues if you are getting money through paypal this way.

Paypal recently had issues with RBI and had issued a public notice to all its users. You can read about notice here: PayPal India Notification

Now answers to your questions:
1. You will fall into income from business/profession.
2. You will have to fill ITR-4 return form.
3. As you have income from business/profession, you will have to maintain profit loss account and you may declare all expenses done (like electricity charges, internet charges, mobile bills, office rental, car maintenance etc) to run the business. You will have to declare income after all these deductions.
4. Once you declare income, normal tax slab rates will apply and tax saving can be done under various sections like 80-C, 80-D etc. Please read more about tax saving on folloing pages:
http://www.socialfinance.in/questions/45/investment-advise
http://www.socialfinance.in/questions/7/tax-saving
http://www.socialfinance.in/questions/118/tax-saving
http://www.socialfinance.in/questions/178/investment-advise

answered May 07 '11 at 12:47 by pankaj 5.2k320

link
Thank you Pankaj for your help! :) I'm fully aware about PayPal India Notification and all issues with RBI. RBI just creating a lot problem for all P-Indian users. Don't know what's the problem with RBI!! But one thing I don't understand. 1. What do you mean by "you may run into issues if you are getting money through paypal this way" ?? 2. Is it bad to use PayPal? 3. What issues you indicate? Can I show some amount say, 1L as a Gift from someone ? as RBI then didn't know how I got that money in PayPal..it just know that the fund came from PayPal.
(May 07 '11 at 13:10) BlackJack
RBI regulates all financial related matter in India. There are strict rules regarding foreign exchange inflows. In case the transactions are reported to RBI by paypal, RBI may issue notice to you. Regarding gifts, income tax is 30% on any gift received of value more than 50,000.
(May 07 '11 at 13:49) pankaj

Know someone who can answer? Share a link to this question via email, twitter , or facebook
.

Your answer
toggle preview

Follow this question

Once you sign in you will be able to subscribe for any updates here

Markdown Basics

  • *italic* or __italic__
  • **bold** or __bold__
  • link:[text](http://url.com/ "title")
  • image?![alt text](/path/img.jpg "title")
  • numbered list: 1. Foo 2. Bar
  • to add a line break simply add two spaces to where you would like the new line to be.
  • basic HTML tags are also supported

Tags:

×777
×13
×12
×2
×1

Asked: May 06 '11 at 19:01

Seen: 5,212 times

Last updated: May 07 '11 at 13:49