What is the ITR-4 Form?
The ITR-4 Form is applicable for individuals or HUFs who have income from proprietary business or are carrying on a profession.
If the requirements of audit are applicable, the due date of filing of return is 30th September. Otherwise, usually the due date of filing of return for non-audit cases is 31st July.
In case the presumptive method of taxation is applicable (Section 44AD and Section 44AE of the Income Tax Act), ITR-4S must be filed.
Since ITR-4S is applicable where gross receipts/turnover is less than Rs 1crore; assesses who are carrying out business or profession under presumptive income as per section 44AD & 44AE of the Income Tax Act but have turnover/gross receipts of more than Rs. 1 crore; will have to file ITR-4.
Presumptive Income & its Taxation – under section 44AD
When you are running a small business, you may not have enough resources to maintain proper accounting information and calculate your profit or loss. This makes it difficult to keep track of your income from such a business and find out how much tax you need to pay.
With this in mind the Income Tax Department has laid out some simple provisions where your income is assumed based on the gross receipts of your business. This method is called the presumptive method, where tax is paid on an estimated basis.
Features of this Scheme
- Your Net Income is estimated to be 8% of the gross receipts of your business.
- You don’t have to maintain books of accounts of this business.
- You don’t have to pay Advance Tax for such a business.
- You are not allowed to deduct any business expenses against the income.
If you are running more than 1 business, the scheme has to be chosen for each business. For example, if you run 3 businesses where only 1 is assessed under section 44AD. The relief of not maintaining accounting records & no requirement of audit is only applicable to the business to which this scheme applies. For other 2 businesses which are not covered under this section – the accounting records have to be made and audit is also required.
Similarly, in case of Advance Tax, the exemption from payment of advance tax is only granted for the business for which this scheme has been opted for. If the tax payer has income which is other than from such business, where his tax liability exceeds Rs 10,000 in a year, he has to pay advance tax on such other income. Advance tax will only be calculated on the remaining income and not for the business covered under section 44AD.
The scheme cannot be adopted by the taxpayer, if he has claimed deduction under section 10, 10A, 10B, Section 10BA, or Section 80HH to 80RRB in the relevant year.
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