Taxation of Home Tutors

With the advancement of education, the techniques and study habits of children these days are also changing for better! Parents, nowadays prefer home tutors for their children as they do not have enough time to look after their children's studies due to their busy schedules. As a result, the number of home tutors have also increased. There is a competition in home coaching as well. Many of such tutors wrote to us that they are confused about taxation of their Income.

Are you a home tutor? Are you unsure about whether your income is taxable or not? and if taxable then under which head of income?

Then this guide is for you.

Your income from taking tuitions will be Income from Freelancing work. To know more about income from freelancing,  click here.

Here are some Frequently Asked Questions (FAQ) and its solution which will help you understand taxation of home tutor:-

1. I am a Home Tutor? Is my income from tuitions taxable?

Ans.:- Yes, income from tuition is taxable. If tuitions is your only profession then Income from tuition will be your main source of income and taxable under the head “Income from Business/Profession”. However, if you are in receipt of any other main source of income like salary income, house property income or income from other business and in addition to this you are giving tuitions, then such tuition income will be taxable under the head “Income from other Sources”.

2. Am I required to file my Income-tax return?

Ans.:- If your income from home tuitions as well as from all the other sources is more than basic exemption limit (i.e. Rs. 2,50,000 in case of individual) in the whole financial year, then you are required to file Income-tax return.

E.g. - Say, your income from home tuitions is Rs. 1,50,000/-, you received salary of Rs. 2,00,000/- and also Rs. 50,000/- interest from fixed deposits, then your total incomes sums up to Rs. 4,00,000 which is more than basic exemption limit. Therefore, you need to file your Income-tax return.

3. What records do I need to keep for Income-tax purpose?

Ans.:- First of all, make sure you are maintaining a register containing student details. It must be having student names, amount of fees paid and student contact details. Make sure that if you receive fees from any student by cash, you deposit it into a separate bank account kept for the sole purpose of teaching fees. This bank account should not be used for any other transactions. Having a separate bank account will bring transparency and you will be clear of exact income received from tuitions. It will also help you in case of scrutiny or notice from Income-tax department in future.

4. Am I required to maintain books of accounts as a home tutor?

Ans.:- If your net profits (incomes minus related expenses) from tuition exceeds Rs. 1,20,000/- for a financial year or your total receipts from tuition are more than Rs. 10,00,000/- in any of the 3 previous years, then you are required to keep and maintain proper books of accounts.

Click here to know about Maintenance of Books of Accounts.

If you are filing your return from myITreturn.com, you will get a step by step assistance and you can file it yourself.

6. What are the eligible expenses that I can claim as a home tutor?
Ans.:- You can claim the expenses which are directly related to tuitions. Some of them are listed as:- 1. Cost of stationary, 2. Advertisement cost for promoting your tuitions, 3. Printing or photocopies of notes, 4. Depreciation on furniture and other assets (tables, chairs, computer etc. purchased for tuition), 5. Books, guides, journals and other academic material, 7. Any other cost directly related to tutoring say electricity or telephone charges etc.

Remember you can claim these expenses only if you have adequate records or proofs like bills, invoices etc. with you.

So, this was about taxation of home tutors. If case you have any queries regarding this topic or any other Income-tax related topic, ask us on myITreturn.com and your query will be resolved. If you want to get your return filed with the help of our tax experts , opt for Assisted filing service and get it done accurately and quickly.