ITR-4 Return Filing

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ITR-4 Return Filing

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Income tax return filing for a taxpayer with taxable income of less than Rs.10 lakhs.

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Description

ITR 4 Form Filing

Form ITR 4 is filed by the taxpayers who have opted for the Presumptive Taxation Scheme under Section 44D, 44DA, 44AE of the Income Tax Act,1961. But this is subject to the business turnover limit i.e in case if the turnover is exceeding Rs.2 crore then the taxpayer is required to file ITR 3 Form.

Presumptive Taxation Scheme is a scheme that exempts small taxpayers from maintaining the books of accounts.

Individuals whose income comes from the following sources have to file ITR 4 Form:

  • Business Income under Section 44AD/Section 44AE.
  • Income from a profession as per Section 44ADA.
  • Income up to Rs. 50 lakh from Salary or Pension.
  • Income up to Rs. 50 lakh from One house property (that does not include the brought forward loss o loss that is to be brought forward under this head)
  • Income from other sources up to Rs.50 lakh (does not include winning from lottery or horse races)
  • Form ITR 4 can also be filed by the freelancers if the income is not exceeding Rs.50 lakh.

The following individuals need to file ITR-4:

  • Holds Directorship in a company
  • Holds any unlisted equity shares at any time during the previous year
  • Has assets/financial interest in an entity outside India
  • Has signing authority in any account outside India
  • Has income from a source located outside India
  • Has profits from a business or profession which is not required to be computed under sections 44AD, 44ADA, or 44AE, like income from a speculative business, commission, brokerage, etc.
  • Makes Capital Gains
  • Has income from more than one house property
  • Has income under the head “other sources” from winning the lottery, horse races, income taxable at special rates u/s 115BBDA or 115BBE
  • Has income which is to be apportioned under the provisions of Section 5A
  • Has agricultural income exceeding INR 5,000
  • Has any brought forward loss or loss which is to be carried forward under any income head
  • Has loss under “income from other sources”
  • Has a claim of relief under Sections 90, 90A or 91
  • Has any deduction claim under Section 57 (except deduction relating to family pension)
  • Has claim of tax credit which has been deducted at source in the hands of another person
  • Has joint ownership in house property (inserted in AY 20-21).

The structure of Form ITR-4 is as follows

  • Part A: General Information
  • Part B: Gross total income under the five heads of income
  • Part C: Deductions and Total Taxable Income
  • Schedule BP: Details of Income from Business
  • Schedule 80G: Details of Donations entitled for deduction under Section 80G
  • Schedule IT: Statement of payment of advance tax and tax on self-assessment
  • Schedule- TCS: Statement about Tax Collected at source
  • Schedule TDS1: Statement of Tax Deducted at Source on Salary
  • Schedule TDS2: Statement of tax deducted at source on income apart from salary
  • Verification Scheme

What are the features of the Presumptive Taxation Scheme?

  • Under presumptive taxation scheme, there is no requirement to maintain the books of accounts
  • The net income is estimated to be 8% of gross cash receipts. However, for payments received via digital mode, the net income is assumed to be 6% of such gross receipts.
  • Deduction of any business expense against this income is not allowed.
  • The business owner has to pay 100% Advance Tax by the 15th of March. There is no need to comply with quarterly installments of due dates of Advance tax (i.e. in June, Sep, Dec)
Small businessmen Professionals Transporters
Applicable Income Tax Section Section 44AD Section44ADA Section44AE
Eligible business The taxpayer may be in any wholesaling, retailing, trading, civil construction, or any other business
  • Legal services
  • Technical consultancy
  • interior decoration
  • Engineering and architectural
  • Medical
Entities of business involved in hiring, plying, or leasing of goods carriages
Maximum turnover limit Up to Rs 2 crore in a year Annual receipts of not more than Rs.50 lakh. Owning not more than 10 goods vehicles during the year.
Computation 8% of total receipts and electronic receipts shall be charged at 6% of gross turnover during the year. 50% of gross receipts. A higher income of more than 50% can be declared ₹ 7,500 per vehicle per month or part thereof based on the duration for which the vehicle was owned by the person during the year
Deductions allowed No further deductions and exemptions are allowed No further deductions and exemptions are allowed No further deductions and exemptions are allowed (A partnership can claim deduction and interest to the partners from the computed income at RS. 7500 vehicle per month)