15,00,000<\/strong><\/td>\n<\/td>\n | <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Assuming he pays Rs 40,000 monthly rent, he would get 100% HRA exempted from tax too. So as an employee the taxable amount would be Rs 8,89,400 (Basic Salary + Special Allowance).<\/strong><\/p>\nAs an independent consultant he can take benefit of\u00a0Presumptive Taxation u\/s 44ADA and his taxable amount would come to Rs 7,50,000 (50% of 15,00,000)<\/strong>.<\/p>\n\nDownload:\u00a0<\/strong>Income Tax Calculator for FY 2019-20 [AY 2020-21]<\/a><\/p>\n<\/blockquote>\n\n\n\nIncome Tax Calculation<\/strong><\/td>\nAs Employee<\/strong><\/td>\nAs Consultant<\/strong><\/td>\n<\/tr>\n\nCost to Company<\/span><\/td>\n | 15,00,000<\/span><\/td>\n | 15,00,000<\/span><\/td>\n<\/tr>\n\nTaxable Income<\/span><\/td>\n | 8,89,400<\/span><\/td>\n | 7,50,000<\/span><\/td>\n<\/tr>\n\nStandard Deduction<\/span><\/td>\n | 50,000<\/span><\/td>\n | 0<\/span><\/td>\n<\/tr>\n\nSection 80C Exemption (-)<\/span><\/td>\n | 1,50,000<\/span><\/td>\n | 1,50,000<\/span><\/td>\n<\/tr>\n\nNPS (Sec 80CCD(1B)) Exemption (-)<\/span><\/td>\n | 50,000<\/span><\/td>\n | 50,000<\/span><\/td>\n<\/tr>\n\nTaxable Income after deduction<\/td>\n | 6,39,400<\/td>\n | 5,50,000<\/td>\n<\/tr>\n | \nIncome Tax<\/td>\n | 40,380<\/td>\n | 22,500<\/td>\n<\/tr>\n | \nEducation Cess<\/td>\n | 1,615<\/td>\n | 900<\/td>\n<\/tr>\n | \nTotal Tax Payable<\/strong><\/span><\/td>\n41,995<\/strong><\/span><\/td>\n23,400<\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n So if our lawyer friend choose to work as consultant he can easily save Rs 18,595 in taxes which is almost half of what he pays as employee!<\/strong><\/p>\nIn most cases consultants\/freelancers have more tax efficient income as compared to employees!<\/p>\n Employee or\u00a0Consultant: What should you choose?<\/h2>\nAs we stated above consultants have an upper hand compared to employees in terms of tax outgo. However this comes at an increased risk of job loss and increased compliance. Choose wisely!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"Few people while taking up a new job have the flexibility to work as an employee or independent consultant (also known as contractor or freelancer). If planned properly consultants have lower tax outgo for the same CTC (Cost to company). With Budget 2016 introducing presumptive taxation for some professionals like legal, medical accountancy, architect, IT […]<\/p>\n","protected":false},"author":1,"featured_media":7785,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[37,3013,63,6],"tags":[2702,2701,3232,3227,3228,3229,3230,3231],"uagb_featured_image_src":{"full":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2017\/02\/Employee-Vs-Consultant-The-Tax-Angle.png",894,527,false],"thumbnail":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2017\/02\/Employee-Vs-Consultant-The-Tax-Angle-150x150.png",150,150,true],"medium":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2017\/02\/Employee-Vs-Consultant-The-Tax-Angle-300x177.png",300,177,true],"medium_large":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2017\/02\/Employee-Vs-Consultant-The-Tax-Angle-768x453.png",768,453,true],"large":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2017\/02\/Employee-Vs-Consultant-The-Tax-Angle.png",894,527,false],"1536x1536":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2017\/02\/Employee-Vs-Consultant-The-Tax-Angle.png",894,527,false],"2048x2048":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2017\/02\/Employee-Vs-Consultant-The-Tax-Angle.png",894,527,false],"yarpp-thumbnail":["https:\/\/www.apnaplan.com\/wp-content\/uploads\/2017\/02\/Employee-Vs-Consultant-The-Tax-Angle.png",120,71,false]},"uagb_author_info":{"display_name":"Amit","author_link":"https:\/\/www.apnaplan.com\/author\/admin\/"},"uagb_comment_info":10,"uagb_excerpt":"Few people while taking up a new job have the flexibility to work as an employee or independent consultant (also known as contractor or freelancer). If planned properly consultants have lower tax outgo for the same CTC (Cost to company). With Budget 2016 introducing presumptive taxation for some professionals like legal, medical accountancy, architect, IT…","_links":{"self":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/7784"}],"collection":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/comments?post=7784"}],"version-history":[{"count":0,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/posts\/7784\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media\/7785"}],"wp:attachment":[{"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/media?parent=7784"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/categories?post=7784"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.apnaplan.com\/wp-json\/wp\/v2\/tags?post=7784"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}} | | | | | | | | | | | |