How to Compute Taxable Income From Adsense Receipt?
July 6, 2007 by taxworry · 2 Comments
First following important points to note :
- The adsense is taxable for all residents of India.
- The earning can be shown as either income from profession or income from other sources. The basic difference between two heads is that if you are carrying on the blog writings on a continuous basis , it shall fall within the meaning of profession even if your prime earning may be from something else. However , there can always be difference of opinion. In my view, best is to show as income from profession .
- If your earning is above Rs 10 lacs , you will have to get your accounts audited. I do not foresee any problem on this count because there may not be any books of account , if you do not account for expense for earning such income. If you want to claim, keep one date wise expense and bank book. Pass book may itself serve as cash/bank book required for maintaining books.What I mean there is no problem case of Adsense earning as far as accounting is concerned.
Suggestion for computing taxable income from Adsense?
The basic principal of computation of business or professional income is that reduce all expense incurred for earning the professional professional income. Therefore , an income & expenditure account can be prepared on following way for adsense earning.
Gross professional receipt or accrued xxxxx
Less
Expense incurred
Internet Charges xxxx
Depreciation on Car xxxx
depreciation on computer xxxx
Advertisement Cost like Adwords xxxx
Expense on books xxxx
Staff expense xxxx
Total Expense xxxxxx
Taxable professional income xxxxxx
All the aforesaid expense can be claimed only if incurred and were spent for the purpose of earning the adsense income.Otherwise not.Depreciation on car can not be availed if you can not prove how car is required for earning such professional income. In nut shell, claim only valid expnese.
And file the return in Form ITR-4 . Get it from here.
What about service tax on adsense income, do we have to pay this if income from adsense is above Rs. 8 lacs per annum
nothing to pay..it is to be paid by google