Income Tax For Architects

Architects are required to pay Income Tax to the government in relation to the income they receive by carrying out their profession. They earn their income through a variety of means and each method is associated with a different method of taxation. In this article, we briefly discuss the various aspects of chargeability of income tax for architects.

Income

Architects can earn their living in this field through methods such as starting an architectural firm and becoming their own boss, by providing consultancy services or by joining an architectural company. Based on the type of setup, the income and taxation can be divided into three categories as below:

Individual Architect

Individuals who earn their living by being an employee of an organization are not necessitated to maintain accounting records or books. TDS (Tax Deducted at Source) should be deducted from the employees for income from head salary and if they file their returns, it would be more than sufficient to satisfy the requirements for an individual. Also, no extra expense will be allowed as a deduction from the salary, other than those included Under Section

Section 80C to 80U.

Architecture Firm

People who render professional services by playing the role of a consultant in partnership firms, joint ventures, LLP (Limited Liability Partnership) and companies need to maintain their Books of Accounts, as specified in section 44AA of income tax act, 1961.
The deductions available in the case of partnership firms are for all direct expenditures, which includes the salary drawn by the architect, maintenance expenditure (which pertains to the housekeeping expenditure), indirect expenditure which is for payment of building on lease and house rent charges.
Of the above-mentioned types of professional services rendered, LLP is popular in the recent era, because it is cost effective and the capacity for growth is immense as it allows unlimited partners.

Presumptive Taxation

There are also cases wherein there is absolutely no necessity to maintain a bill register or a stock list of consumables if the gross receipts in the previous year don't exceed Rs.5000000. Tax audit report need not be filed if the income is not less than 50% of the gross receipts.
In case the taxpayer has opted for a presumptive income scheme, no books of accounts need to be maintained, as specified under Section 44ADA, but advance tax should be paid by such professionals in one installment.
Advance tax is applicable to professionals on a quarterly basis, but if their tax payment is based on the presumptive taxation scheme, the entire amount must be remitted by March 31st every year.
If an architect’s gross receipts exceed Rs.50 lakhs per annum, then they are liable to undergo a tax audit under Section 44AB. Tax audits are usually conducted by a qualified Chartered Accountant.

Deductions

Architects can claim deductions through sections 80C to 80U for Life Insurance premiums, tuition fees of their children, fixed deposit and mutual fund for a maximum of Rs. 1,50,000 per year. In addition to this, they can claim deductions for medical and health insurance policies up to a maximum limit of Rs.25,000, which is Rs. 30,000 for senior citizens.
Other deductions allowed for architects includes any salary paid to other employed architects, rent payable for the office, fees for attending seminars or conferences, internet and telephone charges, stationery, maintenance and housekeeping charges; and if the architect works from home, portions of rent and electricity charges shall also be deducted.

Income Tax Form

As far as filling up of income tax forms are concerned while filing the returns, architects who work as individuals in a company and earn a salary are subjected to fill up ITR-1. It is ITR-4 for architects who render professional services in partnership firms.

Due Date for Filing

Architects who are required to get their books audited must file their tax returns within September 30

th, and those who are not necessitated to fulfill this obligation must file their returns by the 31st of July.

Latest Update on the Pay Later Option for Income Tax Filing

The Income Tax e-filing portal has recently rolled out a 'Pay Later' option, allowing you to complete your tax filing process before making any tax payments. You can pay taxes after you are done filing. For additional information, please refer to our guide – Pay later option for the Income tax return filing. To know about Section 44AE of the Income Tax Act, click here.

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Frequently Asked Questions

Common questions about Income Tax for Architects in India: Rules and Deductions.

TDS should be deducted from architects who are employees of an organization, as it is a mechanism for collecting income tax on their salary income. This helps satisfy their tax obligations as individual taxpayers without requiring them to maintain accounting records or file complex returns.

Architects rendering professional services through firms, partnerships, LLPs, or companies need to maintain proper books of accounts as per Section 44AA of the Income Tax Act, 1961. They can claim deductions for various expenses like salaries paid to employed architects, office rent, seminar fees, stationery, and maintenance charges.

LLP is a popular business structure for architects in recent times as it is cost-effective and offers immense growth potential by allowing unlimited partners. This makes it an attractive option for running an architectural firm or consultancy.

If an architect's gross receipts in the previous year do not exceed Rs. 50 lakhs, they can opt for the presumptive taxation scheme under Section 44ADA. In this case, they do not need to maintain books of accounts, but they must pay the entire advance tax by March 31st each year.

If an architect's gross receipts exceed Rs. 50 lakhs per annum, they become liable to undergo a tax audit under Section 44AB. This audit is typically conducted by a qualified Chartered Accountant and involves scrutinizing their financial records and accounts.

Architects can claim deductions under Sections 80C to 80U for life insurance premiums, children's tuition fees, fixed deposits, mutual funds (up to Rs. 1.5 lakhs), and medical/health insurance premiums (up to Rs. 25,000 or Rs. 30,000 for senior citizens). They can also deduct expenses like salaries paid, office rent, seminar fees, and maintenance charges.

Individual architects who are employees and earn a salary from a company should file their income tax returns using the ITR-1 form.

Architects who are required to undergo a tax audit, typically those with gross receipts exceeding Rs. 50 lakhs, must file their income tax returns by September 30th of the assessment year.

The Income Tax e-filing portal has introduced a 'Pay Later' option that allows taxpayers, including architects, to complete their tax filing process before making any tax payments. They can pay the taxes after filing their returns.

The article provides a link for architects to refer to a guide on Section 44AE of the Income Tax Act, which likely contains relevant information about taxation rules or provisions specific to their profession.