Income tax and Service tax for an individual hired as Consultant or Retainer?

Question

If some one is hired as Consultant or Retainer after retirement(reaching age of 60 years) in India, some companies offer lump sum compensation and deduct TDS at 5.2% and ask one to pay Service tax at 14.5% which may be reimbursed by the company. My questions are-
1. What is one's liability towards Income Tax?
2. Is Service tax paid deductible from one's income or tax due?
3. In case Service tax paid by individual is reimbursed by company, is this amount to be considered in total income ?
4. What other expenses are allowed deductable from income for Income tax e.g. Depreciation on car, interest on car loan etc.
5. How often one has to pay service tax in a year and filing of return?
6. What are the advantages to a company to hire as consultant as well as to individual?
Thanks
VK.

Answer 1

1.Income tax depends on slab. Basic exemp Rs 1 lakh.10% from 1 to 1.5 lac.20% from 1.5 to 2.5 lac. 30% on theamt exeeds 2.5.Lac. 10% surcharge if exeeds 10 lac.Education cess 2% on total tax payable in any slab.
2.Service tax is not deductible in I tax.But u will get cenvat credit of s.tax on the input services(ex telephones etc) paid, which can be utilised for payment of your service tax.
3.servive tax reimbursed will be added both for incometax and service tax as value.
4.As your income fall under profession You can claim all the related expenses such as Rent for an office,telehone, conveyance or car exp,stationery etc.(can try)
5.Service tax can be paid on quarterly basis, before 5th of April,July,October and January.Returns have tobe filed halfyearly before 25th October and April.
6.Company can pay flat fee without paying usual perks applicable to an employee and get experts on parttime basis.
Retired persons get extra income and can have flexible timings and can also work for many companies.

Answer 2

If you are providing taxable service as a consultnt, you need to register with service tax department, charge from the customer and pay to the government 12.24 % Service Tax. If you are Individual or partnership firm, you have to pay service tax on quarterly basis and return on half yearly basis.
If your turnover is less than 4 Lacs, you can claim exemption of small service provider and not required to register with S Tax authorities up to a turnover of Rs. 3 Lacs. ( under Notification 6/2005)

Answer 3

Company not liable to pay Service tax consultants TDS is 5.61% for companies

For individuals TDS is 5.1%

Service tax is 12.24%

Answer 4

Just refer INCOME TAX hand book from NABHI.
You will get all your replies .