I am an A0 at a T1 law firm with zero prior experience in taxation. I have heard terms like ITR and all and I know what they mean in theory but I have no idea how they work. Now that the march is approaching, I am hearing bits from peers about how to claim the taxes that have been levied as TDS back because lawyers fall under some special category or exemption (I may be mistaken, I have no idea). Can someone please outline what's the process of paying/claiming back taxes as an A0 and should I pay attention to something while filling my ITR or at any other step? Please advise.
I'm no expert either so I got a CA. I pay him 2.5k and he files my returns along with P&L, Balance Sheet and everything else that may be required. All I do is send his firm my account statements.
Share his contact here? My CA also files returns, P&L, Balance Sheet - he charges me 12k. FYI - I am relatively senior and my salary has been 35 - 50 lpa for the last 3 years
P&L is not required to filed for ITRs for incomes below 50Lacs and now 75Lacs per . File a simple 44ADA ITR where 50% is presumed to be expenses, no risk in case your actual spends are more than 50% of income. Your CA might be wrongly advising you.
Don't waste your time Googling. It makes a lot more sense to hire a CA. For the first 4-5 years it isn't mandatory, but as soon as you hit 50 lakhs you'll be be audited and you might as well have an equation with someone you trust by then. The cost of CA in your early days will be less than 10K per year. They'll file your return and if you find a sufficiently aggressive one, you'll get a nice fat refund.
In terms of the law, as a lawyer (a profession for tax purposes), till you earn 50LPA, you can claim half your income as an expense, pretty much no questions asked. So at 16 LPA, you pay tax on 8 (minus standard deductions), which is likely less than the 1.6 that is cut in TDS (hence the refund).
Yes, very smart question. The Income Tax Act recognises tier 1 lawyers as a distinct category of lawyers, levitating above the rest of the lawyers, who have to follow different rules.
Read Section 44ADA of the Income Tax Act for a start.
In terms of the law, as a lawyer (a profession for tax purposes), till you earn 50LPA, you can claim half your income as an expense, pretty much no questions asked. So at 16 LPA, you pay tax on 8 (minus standard deductions), which is likely less than the 1.6 that is cut in TDS (hence the refund).
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Invest 1.5L in ELSS funds or PPF or any of those things. Another 50k in NPS. Get a health insurance policy (25k exempt).
Net income after all these deductions will be 5.75L. Incomes upto 5L are exempt, just pay tax on 75k. DIY!