GST on consulting income and advance tax

I’m a software engineer by profession and I left my job in Feb 2017 and started trading in F&O from April this year. However, after 6 months of heavy loss I stopped doing F&O trading. I was approached by a startup to consult for a project with an agreement that I would be paid a consulting fees if they win the project. The company has won the project and they have also offered me a job which I’m going to start from January 2018. They’ve offered to pay my consulting fees as bonus or salary if I so choose.

My income/loss details are as follows:
Income from F&O: – 5 lakh (Turnover: 24 lakh)
Consultancy Income: 10 lakh (Can be taken as salary/bonus)
Income from salary: 8.6 lakh

My income so far for this year has been 0 and all income will come in the last 3 months of the financial year. So my questions are:

1) Is it better to take the consulting fees as salary? As a consultant I can show various expenses like internet bill, phone bills etc. However, do I need a GST registration since my turnover from F&O has already crossed 20 lakh? Does F&O turnover come into consideration when calculating the turnover threshold for registering for GST? If GST registration is needed then I’ll also have to charge and pay a 18% GST which I would prefer to avoid if possible.

2) I’ve not paid any advance tax so far as I was not sure of any income. If I pay advance tax now I understand there will be penalty and interest charges. Is there a provision of rebate in that as I was truly not sure of any income for the year.

Thanks Sandeep

sandyc316 Asked on December 23, 2017 in Taxations.
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1 Answer(s)

Hello Sandeep

F & O Loss cant be offset against Salary Income. So given option between Salary / Consultancy you can opt for Consultancy which will be more tax efficient. With regard to GST though Equity trades doesnot comes under GST still it crosses limit of 20 lacs. GST is charged on and above your Consultancy fees so you need to do a GSt Registration. As the Number of Invoice are only few , you can easily comply.

In case of Salary / Consultancy there will be withholding taxes ie TDS .. It should take care of tax liability. If you believe same will fall short you can pay advance tax with Interest.

TaxIQ Answered on December 26, 2017.
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