India taxes individuals based on a system of income slabs. Different tax rates are assigned to different ranges of income.&nbsp;

Understanding tax slabs is crucial for several reasons.

As a person earns more, the tax liability also increases, creating a fair and progressive tax system in the country. To achieve this, the government regularly updates and announces changes to tax slabs in the Union Budget.

The income tax slabs differ between the old and new tax regimes. Let's explore the specific slab rates applicable to Individuals for FY 2022-23 (AY 2023-24) and FY 2023-24 (AY 2024-25).

Income Tax Slab Rates For FY 2023-24 (AY 2024-25)&nbsp;

Rates of the old tax regime slabs are categorized into three groups:

The new tax regime applies uniform tax rates to all individuals, eliminating the age-based distinctions in the old system. The new tax regime slabs 2023-24 are outlined below.

Applicability of Surcharge for FY 2023-24 (AY 2024-25)

The income tax <a href="https://incometaxindia.gov.in/charts%20%20tables/tax%20rates.htm">surcharge</a> is an extra fee imposed on top of the <a href="https://www.skydo.com/blog/how-to-file-taxes-under-44ada?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">regular income tax</a>. An additional tax is applied to individuals with higher income earnings in a specific financial year. Let’s look at the applicable surcharge rate under the Old and New tax regime.

However, 25% or 37% surcharge rates will not apply to income under the following sections.

Consequently, the highest surcharge rate on the tax payable for such incomes will be 15%.

Starting from the Assessment Year 2023-24, the maximum surcharge rate on tax payable for dividend income or capital gain specified in Section 112 will be capped at 15%.&nbsp;

A 4% Health and Education cess will be applied to all cases’ total income tax liability and surcharges.

Comparison of tax rates under the New tax regime and the Old tax regime for FY 2022-23 (AY 2023-24)

How do you calculate the income tax from the income tax slabs?

Let’s understand the calculation with an example.

Sanjana, aged 35, has a total taxable income of Rs. 8,50,000. She has opted for the old tax regime. Her income includes income from salary, interest and rental income. Deductions under section 80 have been reduced. Now, Sanjana wants to know her <a href="https://www.skydo.com/blog/gst-requirements-international-service-sales?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">tax liability</a> for FY 2022-23 (AY 2023-24).

*Sanjana, an individual taxpayer under the age of 60, enjoys an income exemption limit of up to Rs 2,50,000. Other taxpayers, i.e., senior and super senior citizens, have higher income tax exemption thresholds of Rs 3,00,000 and Rs 5,00,000, respectively.

Please be aware that the tax rates in the New Tax Regime are uniform for all categories of individuals, including regular individuals, senior citizens, and super senior citizens.&nbsp;

Individuals with a net taxable income of up to Rs 5 lakh qualify for a tax rebate under section 87A, resulting in zero tax liability in both the New and Old tax regimes. It's important to note that in Budget 2023, the rebate under the new regime has been extended, making income up to Rs 7 lakh tax-free from the FY 2023-24 onward.

Let's delve into effective strategies to maximize your investments while minimizing the associated tax burdens.

ELSS mutual funds provide a dual benefit of potential capital appreciation and tax savings under Section 80C of the Income Tax Act. Investing in ELSS reduces taxable income and offers a path for long-term wealth growth.

2. Explore tax-efficient investment avenues

Health insurance qualifies for tax benefits under Section 80D. You can claim tax benefits on premiums paid - up to Rs 20,000 for senior citizens and Rs 15,000 for others. For example, if you pay Rs 15,000 for your policy and Rs 20,000 for your senior citizen parent, you can claim a total tax benefit of Rs 35,000.&nbsp;

Maturity value is tax-free for sums received under critical illness insurance policies.

This strategy entails selling loss-making assets to realize the capital loss and using it to offset the gains earned by profit-making assets.

For instance, if you have a loss of Rs. 20,000 in Stock A and a gain of Rs. 30,000 from Stock B, you can sell Stock A during a market downturn to offset the gains. This way, you can reduce your taxable income. The saved amount can be reinvested for portfolio growth.

Ensure that tax loss harvesting aligns with your overall financial goals and plan by considering a discussion with a financial professional or tax advisor.

<a href="https://www.skydo.com/blog/how-can-the-right-chartered-accountant-help-your-tech-export-business?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Consult financial professionals or tax advisors</a> for effective tax planning and strategic advice. Their expertise can provide tailored insights aligned with your financial goals and ensure a well-informed approach to optimize your tax situation.

If you need help deciding what is right for you, we will connect you with our panel of Indian and US-based CA / CPAs. Feel free to reach out to us.

Q1. How is a taxpayer's income categorized?

Ans: A taxpayer's income falls into five categories outlined in Section 14 of the Income Tax Act. These include Income from salary, Profits from a business or profession, Income from House Property, Capital Gains, and Income from Other Sources.

Q2. Is it possible to avail of 80C deductions while choosing the new tax slabs 2023-24?

Ans: No, under the new tax regime, several deductions and exemptions, including those under section 80C, are not permitted. Opting for the new tax regime means foregoing the ability to claim deductions under section 80C.

Q3. What do "Previous Year" and "Assessment Year" mean?

Ans: We have two important terms in income tax provisions: (i) Previous Year and (ii) Assessment Year. Previous Year is when you earn income, typically from April 1st to March 31st. The year right after the Previous Year, from April 1st to March 31st, is called the 'Assessment Year.'

For example, the Previous Year is from April 1, 2023, to March 31, 2024 (FY 2023-24). The corresponding Assessment Year is from April 1, 2024, to March 31, 2025 (AY 2024-25).

Q4. What is the tax exemption limit for calculating income tax rebate under section 87A?

Ans: For FY 2023-24 (AY 2024-25), the rebate limit has been increased to Rs. 7,00,000 under the new tax regime. This means a resident individual with taxable income up to Rs 7,00,000 will receive Rs 25,000 or the amount of tax payable (whichever is lower) as tax relief. However, the old tax regime's threshold limit will remain the same, i.e., Rs 12,500 if taxable income is up to Rs 5,00,000.

Q5. How much is the standard deduction for FY 2023-24?

Ans: You can claim a standard deduction of ₹50,000 to the income taxable under the head ‘Salaries.’ The standard deduction is a tax benefit that can be claimed irrespective of the amount spent on Transport or Medical Allowance. It applies to individuals earning a salary or pension income.

Prepare for the upcoming year's tax season by understanding the tax slabs for 2023-24 and optimizing your tax savings. 

Tax Slabs in 2023-24: Plan Ahead for Next Year Tax Savings

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Rohit Khuranna

Deciding between a current vs. savings account may appear straightforward, but it's a crucial decision for <a href="https://www.skydo.com/blog/how-to-build-a-professional-portfolio-as-a-freelancer?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">freelancers</a>.&nbsp;

Each has advantages and limitations, but understanding which aligns best with your freelancing needs can significantly impact your financial success.&nbsp;

Let's delve into the difference between a savings account and a current account to help you make an informed choice.

Difference Between Savings Account and Current Account

The default choice often leans towards a savings account, which offers a secure avenue for saving and earning interest.&nbsp;

However, as your business evolves and transaction volumes increase, you'll likely need a <a href="https://www.skydo.com/blog/what-are-capital-and-current-account-transactions?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">current account</a>, which is typically designed for businesses.

Here’s the core difference between a current account and a savings account.

Here’s Why Savings Accounts Might Not be Ideal for Freelancers

Advantages of Current Accounts for Freelancers

Here are five key reasons why having a current account is essential.

Considerations for Freelancers Without Expansion Plans

If you're a freelancer without immediate expansion plans or the need for business credit, a savings account might suffice.&nbsp;

However, it's essential to evaluate your individual needs and long-term goals to ensure your chosen account aligns with your financial aspirations.

Choosing between a Current vs. Savings Account is a significant decision for freelancers, impacting financial organization, growth opportunities, and international transactions.&nbsp;

By understanding the difference between a current account and a savings account and assessing your specific requirements, you can make an informed choice tailored to your freelance business.

Remember, the right account choice is crucial for your financial success. For further support and resources tailored to freelancers, consider joining our <a href="https://bit.ly/48UsWkh">community</a>.&nbsp;

Q1. Can I use a current account for personal use?

Ans: It is advisable to steer clear of using a current account for personal purposes to avoid bookkeeping issues.

Q2. Who is eligible for a current account?

Ans: You are eligible to open a current account if you fall under any of the following categories:

Q3. How much money is required to open a current account?

Ans: The minimum balance requirement for a normal current account is Rs. 10000. It's advisable to check with your preferred banking institution for specific requirements.

Q4. Which bank is best for a current account?

Ans: The best bank for a current account depends on your specific needs, including transaction volume, international transactions, fees, and additional services required. Conducting thorough research and comparing offerings can help you find the most suitable option.

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Are you a freelancer, an exporter, or someone receiving personal transfers from abroad? If yes, you’ve probably wondered: Can I receive money from abroad directly into my Indian bank account? The good news is, yes, you can—but it’s not always as straightforward as it sounds.

In this blog, we’ll break it all down receiving money from abroad in India. From the process, to the key factors you need to consider (like fees and conversion rates), we’ll also explore if there’s a smarter way to handle cross-border transfers. Let’s get started!

Can I receive money from abroad in my bank account in India?

The short answer? Absolutely! Indian citizens can receive foreign remittances directly into their savings bank accounts without restrictions, except under the <a href="https://jhpolice.gov.in/sites/default/files/ForeignContributionRegulationAct_1976.pdf">Foreign Contribution Regulation Act, 1976.</a>&nbsp;

Most international transfers today use the <a href="https://www.skydo.com/blog/swift-money-transfer-ultimate-guide">SWIFT network</a>. Here’s how it works: the sender initiates an <a href="https://www.skydo.com/blog/international-wire-transfer-all-you-need-to-know">international wire transfer</a> through their bank, providing your name, account number, and <a href="https://www.skydo.com/swift-code-finder">SWIFT code</a>. Once processed, you’ll typically see the funds in your account within 5 business days.

Banks have long been the go-to option for receiving money from abroad. But with growing demand for faster, cheaper, and more convenient alternatives, platforms like Skydo, <a href="ttps://www.skydo.com/blog/transferwise-india-features-benefits-pros-cons">Wise</a>, and <a href="https://www.skydo.com/blog/payoneer-payment-gateway-features-fees">Payoneer</a> are becoming increasingly popular for receiving money from abroad in India. They offer international virtual accounts and simplified processes, which we’ll dive into later in this blog.

Should I Use My Savings Accounts to Receive Money from Abroad in India?&nbsp;&nbsp;

Yes, you can use your savings account to receive money from abroad. Under the foreign remittance scheme, there are no restrictions on the number of transfers or the amount, e<a href="https://www.skydo.com/blog/compliance-guideline-for-inward-remittance">xcept for trade-related transactions, which have a cap of ₹15 lakh.</a>

But here’s where it gets tricky—if you’re receiving both <a href="https://www.skydo.com/blog/how-to-receive-international-payments-in-india">business payments</a> and personal transfers in the same account, things can get messy.

In India, income earned through business activities is taxable under the Income Tax Act. Mixing personal and business transactions in a single account can complicate tax reporting, making it harder to calculate business income and deductions accurately.

Additionally, businesses are required to file income tax returns, <a href="https://www.skydo.com/blog/gst-requirements-international-service-sale">GST returns,</a> and other financial statements. Using your savings account for business funds can create challenges in maintaining accurate records, potentially leading to compliance issues or penalties for errors.

To keep things smooth and stress-free, it’s often better to separate personal and business transactions. Platforms like Skydo offer dedicated virtual international accounts that can help you manage business payments more efficiently—saving you time, money, and unnecessary headaches.

Receiving Money From India via Banks: Step-by-Step Guide

Here is the detailed process for receiving money from abroad in India into your savings bank account.

Step 1: Provide Your Bank Account Information

Provide the sender with all the bank account information, such as your bank name, account number, branch name, SWIFT code, and <a href="https://www.skydo.com/blog/iban-number-meaning-full-form">IBAN </a>(if applicable).&nbsp;

Wait for the sender to initiate the fund transfer and send you a payment confirmation with the reference number and the expected amount.&nbsp;

International wire transfers via SWIFT may take up to 5 days to credit the money in your bank account. Ensure you get a credit confirmation for the funds, which you can communicate with the sender.&nbsp;

Step 4: Foreign Inward Remittance Advice (FIRA)

If you are receiving an international payment, you need to obtain <a href="https://www.skydo.com/blog/all-you-need-to-know-about-firc-a-complete-guide">FIRA </a>from your bank for the same. It is a document issued by banks as proof of receiving international payments.&nbsp;To get your FIRA, you’ll need to contact your bank directly. However, most banks charge a fee for issuing this document, which can add to your costs.

Things to Note while Receiving Money from Abroad in India via Banks:&nbsp;

Banks are often the default choice for receiving money from abroad in India. However, if you are receiving international payments via banks, here are a few things you should consider:&nbsp;

International Virtual Bank Accounts with Skydo: An Alternate Way to Receive Payments from Abroad in India

Given these factors, a lot of exporters and freelancers are looking at alternatives like international virtual accounts to receive their payments from abroad in India.&nbsp; Skydo for example,&nbsp;provides users with virtual bank accounts in countries like the US, UK, and Australia. Clients in these countries can send payments to these virtual accounts as local transfers, avoiding the hassle and cost of international transfers. Skydo then consolidates these local payments and transfers them to the recipient’s personal bank account in about 24 hours.&nbsp;

In terms of fees, since there are no&nbsp;SWIFT transfers,&nbsp;no SWIFT fees apply. Skydo simply charges a flat rate of USD 19 for payments under $2,000 and USD 29 for payments between USD 2,001 to USD 10,000. And most, importantly it offers live exchange rates with no markup or hidden fees. Meaning if the current exchange rate is INR 84 for 1 USD, that is exactly what you will get.&nbsp;

And not just that, Skydo also offers instant FIRA for every international payment absolutely free of cost. Make the smart move with Skydo—receive money from abroad effortlessly, affordably, and without hidden fees

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Receiving money from abroad in India

For freelancers, timely and accurate GST filing is non-negotiable. Failure to comply can result in hefty penalties. With two filing frequencies—monthly or quarterly—ensuring you file them during these set durations is crucial.&nbsp;

This blog simplifies GST for freelancers, covering registration, filing returns, and staying compliant.

Under GST regulations, mandatory registration is necessary in the following scenarios.

In 2019, the Union government introduced the <a href="https://tutorial.gst.gov.in/userguide/compositionpoc/optforcomposition.htm">composition scheme</a>, offering freelancers earning less than Rs. 50 lakhs annually to pay GST at a reduced rate. Under this scheme, freelancers must pay a combined GST rate of 6% every quarter, with 3% allocated for CGST and 3% for SGST.

To verify your existing GST registration status, follow these steps.

Monthly vs. Quarterly Filing: Which one should you choose?

Consider the following factors to choose between monthly and quarterly GST filing.

GSTR-1 is a monthly or quarterly return that contains details of outward supplies of goods or services. It is a summary of all sales transactions made by a taxpayer during a specific period.

Timely and accurate filing of GSTR-1 is crucial to claim <a href="https://www.skydo.com/blog/how-to-claim-input-tax-credit-refund-in-india?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">Input Tax Credit (ITC)</a> and for reconciliation purposes.

For freelancers who opt for monthly filing, you need to file GSTR-1 every month, generally by the 11th of the next month. If you choose quarterly filing, you must submit GSTR-1 once every quarter, typically by the 13th of the month following the end of the quarter.

GSTR-3B is a self-declared summary GST return filed every month (quarterly for the QRMP scheme). You need to report the summary figures of sales, ITC claimed, and net tax payable in GSTR-3B.

The due date for the monthly filers is the 20th day of the next month, whereas, for quarterly GST returns, it is either the 22nd or the 24th day of the month following the quarter, depending on the state or union territory of the place of business.&nbsp;

Late filing will lead to accumulating interest and penalties. Therefore, choose wisely.

Collect all relevant documents, such as invoices, bills, and bank statements, that will be required for filing GST returns.

#2: Log In to the <a href="https://selfservice.gstsystem.in/">GST Portal</a>

Visit the official GST portal and log in using your credentials.

#3: File GSTR-1 (Outward Supplies Details)

#4: Reconcile and Finalise GSTR- 2A (Auto-populated Supplier Details)

#6: Make Online GST Payments Based on GSTR-3B

After filing GSTR-3B, make online GST payments using the available payment options on the GST portal. Ensure timely payment of tax liabilities to avoid penalties and interest charges.

Staying GST compliant is paramount for freelancers to avoid penalties and maintain financial health. If you need more clarification, it's wise to seek personalised advice from a <a href="https://www.skydo.com/blog/chartered-accountants-approve-skydo-for-seamless-gst-refunds?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">tax professional</a>.

The GST portal is your go-to resource for more help navigating GST for freelancers. It's packed with handy tools, guidelines, and updates to keep you on track with GST regulations.&nbsp;

If you're eager to dive deeper into tax filing strategies tailored for freelancers, don't forget to explore our <a href="https://www.skydo.com/blog/how-to-file-taxes-under-44ada?utm_source=blogs&amp;utm_medium=website&amp;utm_campaign=post_link">blog.</a>&nbsp;

Q1. Do I need to pay advance tax if my GST liability is high?

Ans: There is no provision for paying advance tax in case of higher GST liability.

Q2. What are the benefits of opting for the Composition Scheme?

Ans: Benefits of opting for the composition scheme:

Q3. What documents do I need to keep for GST filing?

Ans: Documents Required for GST Filing include:

Q4. What are the different types of GST returns I need to file?

Ans: Here are the main types of GST returns you might need to file.

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As a freelancer or professional in India, managing your taxes doesn't have to be complicated. The government has introduced a simpler way through Section 44ADA of the Income Tax Act - the presumptive taxation scheme that lets you pay taxes on just 50% of your gross receipts, regardless of your actual expenses.

No more maintaining detailed books or tracking every expense. Whether you're a doctor, architect, lawyer, or freelance consultant, this scheme could significantly simplify your tax compliance while potentially reducing your tax burden.

In this guide, we'll break down everything you need to know about Section 44ADA - who can use it, the limits, how to file your income tax return, and common mistakes to avoid.&nbsp;

What is Section 44ADA of the Income Tax Act?

<a href="https://incometaxindia.gov.in/Acts/Finance%20Acts/2003/102120000000009718.htm">Section 44ADA</a> is a simplified tax calculation method for professionals and freelancers. Instead of tracking every expense and making complex calculations, these normal provisions assume that half of what you earn is your net profit.

Here's how it works: You earned ₹20 lakhs from your consultancy work this year. Under Section 44ADA, You can declare ₹10 lakhs (50% of your earnings) as your taxable income. The remaining ₹10 lakhs are considered to cover your business expenses - no questions asked, no proof needed.

This straightforward approach saves you from the hassle of maintaining detailed expense records while potentially reducing your tax burden.

Who is eligible for Section 44ADA of the Income Tax Act?&nbsp;

Not everyone can take advantage of Section 44ADA - designed specifically for certain eligible professionals and small business structures. Let's break down who can benefit from this presumptive scheme.

If you're working in any of these fields, you're likely eligible:

For example, if you're a doctor running your clinic as an individual practitioner or in partnership with other doctors, you can opt for Section 44ADA. However, if you've structured your practice as an LLP or a private limited company, you won't be eligible for this scheme.

Remember, just because you're in one of these professions doesn't automatically mean you should opt for Section 44ADA. The decision should depend on your actual expenses and business circumstances. 

What are the limits under 44ADA of the Income Tax Act?&nbsp;

To use Section 44ADA, your professional income must stay within certain limits.&nbsp;

Here's what you need to know about these thresholds:&nbsp;

₹50 Lakhs If you're receiving payments through any means (cash, cheque, or online transfers), you can use Section 44ADA as long as your total professional income doesn't exceed ₹50 lakhs in a financial year.

&nbsp;₹75 Lakhs There's good news if you mostly receive digital payments. You can enjoy a higher limit of ₹75 lakhs if you meet this condition:

Scenario 1: A consultant earning ₹60 lakhs annually:

Scenario 2: A lawyer earning ₹55 lakhs annually:

💡Important: When we say "cash receipts," this includes not just physical cash but also bearer cheques and bank drafts that aren't account payee. To stay safe, always insist on account payee cheques or digital payments from your clients.

Taxable Income under 44ADA of Income Tax Act&nbsp;

Let's examine how your taxable income is calculated under Section 44ADA—it's simpler than you might think.

Under Section 44ADA, the tax department assumes half of your turnover is your profit. Here's how it works in practice:

Let's say you're a freelance architect who earned ₹40 lakhs this year:

📚Note: Once you calculate your income this way, you can't claim any additional expenses. The 50% calculation is final - even if your actual expenses were higher or lower.

Can you declare more than 50%?&nbsp;

Yes! The 50% is just the minimum. If your actual profit is higher, you should declare the higher amount. For example, if your real expenses were only ₹15 lakhs on a ₹40 lakh income, you should declare ₹25 lakhs as your taxable income.

A consultant earns ₹30 lakhs in a year:

Remember, this simplified calculation is one of the biggest advantages of Section 44ADA - no need for detailed bookkeeping or expense tracking!

Let's clear up a common confusion - Section 44ADA doesn't have its special tax rates. Instead, after calculating your taxable income as 50% of your gross receipts, you'll pay taxes according to regular income tax slab rates.

Here's a practical example: Imagine you're a freelance consultant earning ₹30 lakhs annually:

Choose your tax regime based on your overall tax situation, including available deductions and other income sources.

The only thing Section 44ADA does is help you calculate your professional income easily - it doesn't change how that income is taxed. You'll still need to pay taxes according to the normal income tax slabs applicable to you.&nbsp;

Section 44ADA of Income Tax Act with Example&nbsp;

Here, we look at two practical examples to understand how Section 44ADA impacts your tax calculations.

Example 1: A freelance software exporter&nbsp;

Meet Priya, a freelance software exporter who earned ₹40 lakhs this year with actual expenses of ₹12 lakhs.

In this case, Section 44ADA benefits Priya by reducing her taxable income by ₹8 lakhs.

Consider Rahul, a legal consultant with annual earnings of ₹35 lakhs and high operating expenses of ₹22 lakhs.

Here, Rahul would pay more tax under Section 44ADA since his expenses exceed 50% of his income. He's better off not opting for this scheme.

👉Key Takeaway: Section 44ADA isn't always the best choice, depending on your business expenses. If your real expenses are less than 50% of your income, 44ADA can save you taxes and reduce your compliance burden. But if your expenses are higher, you might want to opt for regular tax computation.

Do I Have to Pay Advance Tax Under Section 44ADA of the Income Tax Act?&nbsp;

Yes, you must pay advance tax if you opt for Section 44ADA, but the rules are simpler than regular advance tax payments.

What happens if you miss the deadline? If you don't pay advance tax by March 15th:

💡Pro tip: Mark March 15th on your calendar and set aside funds throughout the year to meet this obligation. It's better to be prepared than to scramble for funds at the last minute!

Do I have to Maintain Books of Account under Section 44ADA of the Income Tax Act?&nbsp;

One of the biggest advantages of Section 44ADA is that it frees you from the hassle of maintaining detailed books of accounts - with some conditions, of course. Let's break this down:

Suppose you're declaring 50% (or more) of your gross receipts as income, and your total receipts are within limits (₹50 lakhs generally, or ₹75 lakhs for mostly digital payments). In that case, you can skip maintaining detailed books of accounts.

When you must maintain books: You'll need proper bookkeeping in two situations:

Example: A consultant earning ₹40 lakhs annually who declares ₹20 lakhs (50%) as income:

The same consultant, if declaring only ₹15 lakhs as income (claiming higher expenses):

👉Remember: While detailed bookkeeping might not be mandatory, keeping basic records of your income and major expenses is still good practice for your reference!

Which ITR form to choose for Section 44ADA of the Income Tax Act?&nbsp;

If you've opted for Section 44ADA, you must file your returns using ITR-4. This form is specifically designed for professionals and businesses using presumptive taxation schemes.&nbsp;

Mistakes to Avoid When Opting for Section 44ADA&nbsp;