A freelance designer in India works for clients in India and abroad. What tax advice would you give?
What the interviewer wants to hear
- Income taxed as profession under business or profession
- Presumptive option under Section 44ADA if eligible
- Advance tax obligations and TDS credits
- GST registration and export of services treatment
- Record keeping and choice of tax regime
Model answer
I would explain that her income is taxed under profits and gains of business or profession. If she is an eligible professional and her receipts are within the limit, she can use the presumptive scheme under Section 44ADA, declaring 50% of gross receipts as income without detailed books, or keep accounts and claim actual expenses if they are higher than half. Indian clients may deduct TDS on her fees, which she claims against her tax, and because there is no employer deducting tax, she will usually need to pay advance tax in instalments. For GST, she must register once her turnover crosses the threshold for services. Services to foreign clients can be exports of services, which are zero-rated: she can file an LUT and invoice without IGST if conditions such as receipt in foreign exchange are met. I would help her compare regimes, set aside tax monthly and keep invoices and bank records organised.
Can you answer it under time pressure?
Take a timed medium round and get scored on every answer.
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