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Question for Indians - Can I get a deduction on my home office?

writer99025

By writer99025
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writer99025 Collaborator

writer99025

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What are the rules on this? Is it possible to get a deduction on your home office for a home-based business? I am registered as a self-proprietorship for income tax purposes, so wondering if I can get a deduction on my home office? I will talk to my accountant about this, but there is still a long time to go for the tax filing. Wondering what you think.

shilpityagi_eco Apprentice

shilpityagi_eco

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Or I - as the owner of the property - could charge my business a monthly rent. And my business could write off the rent as expenses and get a deduction on it. Just an idea.

Yes, you can deduct the rent, internet bill, part of electricity bill and other expenses that you spend on your business. I have not done that as my accommodation was provided by my employers but it was advised by the CA.

writer99025 Collaborator

writer99025

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Yes, you can deduct the rent, internet bill, part of electricity bill and other expenses that you spend on your business. I have not done that as my accommodation was provided by my employers but it was advised by the CA.

Yeah, but I am the homeowner - so how does this work? Should I make a rent agreement to myself, or just deduct directly under “home office deduction”? In the US they have this home office deduction, the concept has not caught on in India I think.

shilpityagi_eco Apprentice

shilpityagi_eco

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Yeah, but I am the homeowner - so how does this work? Should I make a rent agreement to myself, or just deduct directly under “home office deduction”? In the US they have this home office deduction, the concept has not caught on in India I think.

Do you keep the book of accounts yourself or do you employ a CA?

shilpityagi_eco Apprentice

shilpityagi_eco

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Hire a CA, of course. But he is not very knowledgeable about freelancing.

Oh, I see the problem now. You have your own house but l you can deduct assumed house rent (INR 2000 to 5000). I use services from an online CA group. It is http://www.myonlineca.in/. They are very good with their work and they are knowledgeable when it comes to freelancing.

writer99025 Collaborator

writer99025

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Oh, I see the problem now. You have your own house but l you can deduct assumed house rent (INR 2000 to 5000). I use services from an online CA group. It is http://www.myonlineca.in/. They are very good with their work and they are knowledgeable when it comes to freelancing.

Okay, I will tell my CA about this. But I have to hire this CA only because he has been handling my returns for last 10 years. My returns are not simple, freelancing is just a part of it. He handles the other stuff very well, but has not saved much money for me for the freelancing part.

writer99025 Collaborator

writer99025

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Even my income tax returns are so complicated. I actually read all the service tax and income tax laws by myself. I hate this so much that I want to do something which does not involve any income tax.

There’s no escape. It’s important not to take too many risks with the deductions as you wouldn’t want to be audited.

misscrystal Grand Master

misscrystal

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I’m not Indian but my accountant is invaluable as far as finding deductions. She is great. She is very informed and up to date about all new laws and rules about freelancers. Sorry to butt into a thread directed at Indians but just saying, the right accountant is important.

She was recommended at an IRS office I went to.

mariokluser Enthusiast

mariokluser

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Our ‘Dutch IRS’ gives out a manual for entrepreneurs what is downloadable and if something isn’t clear for your situation you can click a link and you will be redirected to a tool where you have to answer some simple questions. Then you get the answer if something is or isn’t possible for you. If still in doubt you can call them or make an appointment with an inspector.
Of course I know the rules here, but I couldn’t say anything about your country.

misscrystal Grand Master

misscrystal

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Funny side note: the boss of our IRS has to go because he doesn’t have enough knowledge about taxes. How funny is that?

@mariokluser It’s commendable that your country is willing to fire someone who doesn’t know anything about the position he is in, unlike in our country where it seems the less you know about your office the more you get to stay there and mess it up as much as you please. This is off topic of course but to writer, it may be worth it to ask around and find a truly up to date accountant who can direct you in ways that save you the most money as a freelancer.

rshyamb Newbie

rshyamb

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Bookmarked this thread because it kind of fits my situation - Freelancer, Indian, planning on setting up a small office in my home (not sure when).
Thank you @shilpityagi_eco for giving reference of the online CA group. I will have a look into it for sure.

shilpityagi_eco Apprentice

shilpityagi_eco

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Bookmarked this thread because it kind of fits my situation - Freelancer, Indian, planning on setting up a small office in my home (not sure when).

Thank you @shilpityagi_eco for giving reference of the online CA group. I will have a look into it for sure.

You are welcome. They are seriously good and I really like the idea that I can file income tax returns from anywhere in the world. It is like absolute freedom when I am not required to visit their office.

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