Taxation for contracting work

POSTED BY Raj ON January 25, 2013 11:00 am COMMENTS (6)

Hi friends, this is Raj from Hyderabad and I am new to the forum. I hope to interact with all of you through this forum which I have found quite useful.

My question is on the expenses that I can write off from my consultancy income – currently my plans are Rent (partly as I use my home as office too), Petrol, Telephone, Internet, Laptop cost (bought this FY for business), business entertainment etc. I will have bills for all of these – are there any other documentation needed? Can I write some other expenses off logically?

I do not want to engage a CA now as the expenses and receipts are fairly simple to track.

Looking forward to suggestions from the forum.

6 replies on this article “Taxation for contracting work”

  1. Raj says:

    Dear Ashal,

    As of now I am a operating like a freelancer though I may register a company next FY. I think the applicable form will be ITR 4. As it is a 21 page form with all sorts of complex details, I will need the help of a CA to fill it up. Seems rather an overkill as most of the information asked for is not applicable to me.

    Anyone who is having consulting income and have filled up ITR 4 in the previous years – can you share your experience with me? Also I know that different CA s will charge differently for these services but is there a ball park figure that I should be looking at? This will help me in my discussions as right now I have practically no idea.

    Would appreciate feedback from you and others in the forum on this.


  2. Dear Raj, laptop’s amount ‘ll be available for depreciation & your aplicable form for ITR filing ‘ll be either ITR-3 or ITR-4. based upon how you are running your consultancy work? all the above expenses are available for set off from your business income as legitimate business expenses.

    In my personal opinion, please do take help of a CA or tax professional to file your ITR as you may not fill the form yourself. It’s my guess only for you. If you can fill your form on your own, so be it.



  3. Raj says:

    Hi Ashal,

    My consultancy related expenses in different heads are as follows:-

    Petrol – 4000
    Rent – 10000 ( out of a total of 23000 )
    Electricity – 1000 ( out of total of 2500 )
    Phone – 1000
    Mobile – 1000
    Internet – 700
    Laptop – 60000 ( Can I take total cost in this FY? )
    Stationery etc – 400

    As of now I operate from home so there is no office expenditure.


    Apart from laptop all others are monthly figures.

  4. Dear Raj, thanks for your views. any expenses which can be co-related with your consultancy work can be adjusted against your business income. Like – House Rent, electricity, water bill, mobile & phone bill, fuel cost, parties & get togethers organized for your business, offcie furniture, Computer etc. purchased for your business. These are, merely an example.

    If you can provide a complete list of your expenses. We can look into it & decide for more accurate answers.



  5. Raj says:

    Dear Ashal,

    Firstly thank you for the quick response. I am not looking for actual calculations of tax, my question was on what are the logical expense types that can be set off against the consultancy income. There must be some people in the forum who are doing consulting for a longer time than me – wanted to get some pointers from them.

    The personal finance knowledge of many people in this forum is excellent. I have been a corporate executive for 24 years before starting my consultancy and have a keen interest on the subject. Hope to learn more from the discussions in the coming days.

    I agree that the actions taken out of the advice or suggestions will be mine – so am looking for information only at this stage.


  6. Dear Raj, with out knowing the exactdetails of your other expenses, how can anybody answer to your query?

    By the way, please ask at your own risk here in the forum. Why?

    Me (Ashal Jauhari – a chem. engr. by profession), Dear Ramesh (a doctor), Dear FFC (Pattu – A physics professor), Dear Manish Chauhan (A software pro) & many more active participents in the forum, are not holding any financial degree. So At a later stage, please do not blame here to anybody that a wrong advice was given to you & you incurred losses by acting upon the advice.



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