Knowledge
about the ITR
Types
of Income Tax Return Forms
To
file tax returns Income Tax Department had issued a series of forms
applicable to different type of assessees:
ITR 1: This form is applicable for an individual who has no
income other than Salary/ Pension and Interest.
ITR 2: This form is applicable for an individual who has
income under different heads but not business /profession income.
ITR 3: This form is applicable for an individual who is
partner in a partnership firm .
ITR 4: This form is applicable for an individual who has
income from business/profession.
ITR 5: This form is applicable for a Firms, AOP,BOI,
Local Authority.
ITR 6: This form is applicable for a Company.
ITR 7: This form is applicable for a Trust.
ITR 8: This form is used for filing only FBT Return.
Due dates to file
Income Tax returns
The due dates for filing
Income Tax Returns for A.Y. 2008-09 as specified under the Income Tax are as
under:
31st
July
For all the persons who are
not liable to get their accounts audited under the Income Tax Act.
30th
September
a) Companies
b) All the persons who are
liable to get their accounts audited under the Income Tax Act or any other
law.
c) All the working partners
of the firm who are liable to get their accounts audited under the act or any
other law.
Penalties under the Income Tax Act
There
are different penalties leviable under the Indian Income Tax Act for defaults
under the various provisions of the act committed by an assessee. There are
many provisions under which the penalties are leviable under the act. There are
some penalties that are mandatory in nature while in most of the cases penalty
is leviable at the discretion of the Assessing Officer (AO). The major
penalties that are imposed under the act along with their nature of defaults
are given as under:
1. Default: Concealment of Income or furnishing inaccurate particulars
of income.
Minimum
Penalty: 100% of tax sought to be evaded.
Maximum Penalty: 300% of tax sought to be evaded.
2. Default:
Failure to keep or maintain books as required u/s 44AA.
Minimum Penalty: Rs. 25,000/-
3. Default:
Failure to get accounts audited or furnish report u/s 44AB.
Minimum Penalty: ½% of the total sales, turnover or
gross receipts.
Maximum Penalty: Rs. 100,000/-
4. Default:
Taking/Repaying or accepting any loan or deposit in contravention of the
provisions of section 269SS /269T (Loan taken or repaid above Rs.
20,000 in cash).
Minimum Penalty: Amount of loan/deposit so taken or
accepted or repaid.
5. Default: Failure to furnish Return of Income.
Minimum Penalty: Rs. 5000/-
Who can file ITR 4 ?
ITR 4 can be filed by all those who opt for presumptive
income for instance
1. a small businessman having turnover less than Rs 2crore
may opt for the scheme u/s 44AD and declare the profits at 8% of gross
receipts(6% in case of digital receipts).
2. A doctor can opt for presumptive income scheme u/s
44ADA if his gross receipts donot exceed Rs 50 lakhs and can declare 50% of
gross receipts as his income.To know more.
3. An engineer can also opt for this scheme.
4. Film Artists
5. Persons engaged in the accountancy profession, Interior
decoration, Technical Consultancy can also for this scheme.
Freelancers engaged in the above profession can also
opt for this scheme if their gross receipts do not exceed Rs 50 lakhs.
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. But
From FY 2016-17 onwards, if gross receipts are received through digital
mode of payments ,then Net Income is estimated at 6% of such gross
receipts and for cash receipts ,rate is same at 8% of such cash receipts.
- You
don’t have to maintain books of accounts of this business.
- You have
to pay 100% Advance Tax by 15th March for such a business. No
need to comply with requirement of quarterly installments due dates
(June,sep,Dec) of advance tax.
- 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 benefit of paying the advance tax in one
installment by 15th March 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.
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.
Eligibility
Criteria for this Scheme
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 2 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.(see Sec 44ADA)
These are
the professions listed under section 44AA(1).
Devesh
runs a medical shop in his colony. The receipts of his business are Rs
1,50,00,000 in financial year 2016-17. Can Devesh take benefit of the scheme
under section 44AD?
Devesh is
a resident and his receipts from this business are less than Rs 2 crore. His
business is not listed under the non-eligible businesses list and therefore he
can avail this scheme under section 44AD.
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.
Rohit
runs a kiryana shop and his gross receipts are Rs 75,12,260 from this business.
He decided to opt for the scheme under section 44AD. He also wants to claim
depreciation for 1 large refrigerators and a computer with billing system he
purchased for Rs 2,50,500. He also spent Rs 1,50,000 buying new racks for
displaying his goods.
Since
Rohit has opted for the presumptive scheme under section 44AD, his net income
is computed as 8%(assuming all cash receipts) of Rs 75,12,260 = Rs
6,00,981. Under this scheme no deductions are allowed from income. Rohit will
not be allowed to deduct depreciation from this income. He cannot deduct
expenses for purchase of the new rack.
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.
Ritesh
runs a stationary shop and his turnover from this business are Rs 85,20,000. He
wants to opt for the scheme under section 44AD and therefore his income shall
be Rs 6,81,600 (at 8% of gross receipts,assuming all cash receipts). However
Ritesh’s actual income from the business works out to Rs 5,74,000. Ritesh
decides to not opt for the scheme under section 44AD and pay tax on the actual
income of his business. However, since he’s not opting for this scheme he has
to maintain proper accounting records and also get his records 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.
Presumptive Income
in case of taxpayers engaged in business of plying, leasing or hiring of trucks
(under Section 44AE)
For those
who are in the business of plying, leasing or hiring of trucks a scheme similar
to presumptive income scheme under section 44D is available.
Features
of this scheme
- Net
Income from a heavy goods vehicle (including any goods carriage) will be
assumed as Rs 7,500 per month for each vehicle beginning assessment year
2015-16.
- You
don’t have to maintain books of accounts of this business.
- You have
to pay 100% Advance Tax by 15th March for such a business. No
need to comply with requirement of quarterly instalments due dates
(June,sep,Dec) of advance tax.
- You are
not allowed to deduct any business expenses against the income.
Here
‘Goods carriage’ means any vehicle used only for the carriage of goods. ‘Heavy
goods vehicle’ means a goods carriage whose standalone weight (without loading
goods) is more than 12,000 kgs.
Part of a
month shall be rounded off to the next month. For example if a goods carriage
is owned for 9 months and 3 days, the net income shall be calculated as if the
carriage was owned for 10 months.
The
relief of not maintaining accounting records & no requirement of audit is
only applicable to the business to which this scheme applies. For any other
businesses which are not covered under this section – the accounting records
have to be made and audit is also required.
In case
the taxpayer chooses to declare lower income than above, he shall have to
maintain books of accounts and get them audited.
Eligibility
Criteria : To avail this scheme
- You
should be in the business of plying, leasing or hiring trucks.
- You
should not own more than 10 goods carriages at any time during the year.
Include carriages taken on hire purchase or on installments.
- You may
be an individual, HUF, Company or partnership firm – scheme is allowed to
all taxpayers.
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.
Rohan is
engaged in the business of plying, hiring or leasing goods carriages, and owns
5 trucks and another 2 trucks which have been taken on installments. Rohan
wants to know what will be his income from this business.
Rohan can
opt for the scheme under section 44AE since he earns less than 10 trucks. He owns
7 trucks in total, include trucks which have been purchased on installments
even if some installments are unpaid. Rohan’s income from this business shall
be Rs 7 trucks x Rs 7,500 x 12 months = Rs 6,30,000 shall be Rohan’s net income
from this business. No business expenses can be claimed from this income.
Can
the taxpayer declare higher or lower income?: The taxpayer can
voluntarily declare a higher income and pay tax on it. In case the taxpayer
chooses to declare lower income than as mentioned above – he shall have to
maintain books of accounts and get them audited.
Presumptive Income in case of
Professionals (under Section 44ADA)
The
benefit of Presumptive tax rates were only available to Businesses. But now
this benefit has been extended to professionals also .It will be applicable to
the Professionals whose total gross receipts does not exceed Rs 50 lakhs in a financial year.
Presumptive
Tax Rate:
The income of the professionals opting for this scheme would be assumed at 50%
of the total Gross receipts for the year.
Applicability
of the scheme:
The Persons engaged in the following profession can opt for this presumptive
Income scheme:
1.
Medical
2.
Engineering
3.
Legal
4.
Architectural
Profession
5.
Accountancy
Profession
6.
Technical
Consultancy
7.
Interior
Decoration
8.
Other Notified
Professionals
9.
Authorized
representatives
10.
Film Artists
11.
Certain Sports
related person
12.
Company
Secretaries
13.
Information Technology
The
scheme is applicable only to a resident assesse who is an individual, HUF or
Partnership but not LLP (Limited Liability Partnership Firm).
No
requirement of Maintenance of books of Account: Professionals opting
for this scheme need not maintain books of account required to be kept under
sec 44AA and also he need not get the books of account get audited under sec
44AB.
Deduction
for Business Expenses: No business expenses
are allowed to be deducted from the net income. Depreciation is also not deductible.
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.
Can
the taxpayer declare higher or lower income? The taxpayer can
voluntarily declare a higher income and pay tax on it. In case the taxpayer
chooses to declare lower income than as mentioned above – he shall have to
maintain books of accounts and get them audited.
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