Dear All,

I have been offered a job with CTC of 20 lacs PA. However since the income tax after deductions are high the company offered me a retainership contact for the same amount.

I have been a salaried person till now.

the company says that since the tax is 10% on the retainership fee, my net take home will be high.

wanted to understand if this is correct. Moreover, once i pay the 10% tax is there any additional tax i have to pay for the fees.

regards,

Max

Mr Max

Indeed the net take home is higher but ultimately while filing taxes you will be liable to tax on the net income. Even though as a consultant you will be eligible to claim certain reasonable expenses but finally will end up self assessment tax from your pocket. Moreover, you will not be eligible for P.F, gratuity and other benefits what usually an employee derives. My advise would be it would be wise to be an employee rather than being a consultant.

Further you will also attract service tax since the professional receipts  has crossed the threshold limit of Rs.15.00 lakhs for the financial year 2010-11. At present the rate of service tax is 10.3% which needs to be collected on your bills and remitted to the department. Non collection of ST will attract recovery from your fees.

Do agree with Mr Vishal. What the company is talking about is TDS but the Income Tax is leviable on your total income.

If the service tax is included in your gross compensation, it is better you accept employment.

Dear Max,

Besides Advance tax/Self assessment tax and Service tax, you will be also liable to audit your accounts u/s 44AB ct, 1961of the Income-tax Aas an individual, if your professonal/consultanting fees is above Rs. 15 L during the year.

You better ask for employment rather than retainership.

Regards

Chandrakant Devani

Advocate Vishal has indeed given excellent advice and elaborated the pros and cons. Employment vs. Retainer

Employment protects far more your rights and benefits, in all respects. 

Vasudevan

Dear Contributers,

Thanks for your valuable suggestion. Have agreed to take employment over retainer contract.

thanks indeed for your inputs.

Regards,

Max

Hi Max, I think finally u have decided to be employee. I am a real sufferer of being retainer. I also agree with Mr Vishal as there might be tax benefits till some thresholds but one can'nt several amenities. I have been exploited by my employer interms of extended working hours even without project work without any compensation. Being an employee will strengthen your rights. I worked in the organization for 3 years without any gratuity or bonus.

So its good that u finally opted for employee.

Dear Friends

I am working in a public charitable trust in which there are few consultants who are aged above 56yrs drawing monthly professional charges  of Rs.75,000 to Rs.1,00,000/- per month. They all deducted flat 10% as TDS.

My query is:-

They claim they are consultant they need not pay Professional Tax levied by local Corporation or Municipality for thehalf yearly  period Sept 2010 - is it correct?

They are not covering themselves under service tax and evading tax is it correct?

Seeking your advise and suggestion for deducting the professional tax or not to deduct the professional tax

regards

Venkattaraman Arthanari