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Eligibility Criteria for ITR 4S

Eligibility Criteria for ITR 4S

To be eligible for this scheme:

  • Your gross receipts or turnover of the business for which you want to avail this scheme should be less than Rs 1 crore.
  • You must be a Resident in India.
  • This scheme is allowed to an individual, a HUF or a partnership firm. It is not available to a Company.

Eligible Businesses

The taxpayer may be in any business – retail trading or wholesale trading or civil construction or any other business to avail this scheme. But this method of income computation is NOT applicable to:

  • Income from commission or brokerage
  • Agency business
  • Business of plying, hiring or leasing goods carriage (see section 44AE)
  • Professionals – who are carrying on profession of legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, an authorized representative, film artist, company secretary and information technology. Authorized representative means – any person, who represents someone, for a fee or remuneration, before any Tribunal or authority under law. Film Artist includes a producer, actor, cameraman, director, music director, art director, dance director, editor, singer, lyricist, story writer, screenplay writer, dialogue writer, dress designer – basically any person who is involved in his professional capacity in the production of a film.

These are the professions listed under section 44AA(1).

Eligibility Criteria for ITR 4S

Deduction for Business Expenses

No business expenses are allowed to be deducted from the net income. Depreciation is also not deductible. However, in case of a partnership firm, separate deduction for remuneration of partners and interest paid to partners is allowed. This must be within the limit specified under section 40(b).

Even though depreciation is not allowed as a deduction written down value (WDV) of the assets shall be considered as if depreciation has been allowed.

Eligibility Criteria for ITR 4S

Can the taxpayer declare higher or lower income than 8% of gross receipts?

The taxpayer can voluntarily declare a higher income and pay tax on it. In case the taxpayer chooses to declare lower income than 8% of gross receipts – he shall have to maintain books of accounts and get them audited.

Computing Turnover or Gross Receipts

Gross receipts or Turnover mean the total collections of the business. The receipts shall be inclusive of VAT & Excise Duty. The receipts shall also include delivery charges as well as receipts from sale of scrap.

Discounts given, advances received and money received on sale of assets should be excluded.

Eligibility Criteria for ITR 4S




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Eligibility Criteria for ITR 4S



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