ITR-4 Return Filing for Presumptive Income - Legal Help Made Easy

Introduction

ITR-4 Filing is a simplified way for many small business owners and professionals in India to file their income tax returns. This form is specially designed for those who choose the presumptive taxation scheme. Imagine it’s like a simpler version of a tax form, made just for small businesses! The ITR-4 Filing process can seem confusing, but we’re here to make it easier for you.

The presumptive taxation scheme under the Income Tax Act aims to help small businesses by making tax filing less complicated. Instead of tracking every single expense, you can declare a certain percentage of your income as profit. This makes things much easier.

However, many small business owners still struggle with understanding if they are eligible and how to file ITR-4 correctly. A recent survey shows that nearly 60% of small business owners find the ITR-4 form complex. If you are one of them, don’t worry! Prospect Legal in Bhopal is here to help. Whether you’re a shopkeeper in Bhopal or a freelancer in Indore, we can guide you through the process.

Need help with your ITR-4 filing? Contact Prospect Legal today for expert assistance!

Understanding Presumptive Taxation and ITR-4 Form

Presumptive taxation is a way for the government to simplify tax compliance for certain taxpayers. Instead of keeping detailed records of all your income and expenses, you can estimate your income based on a pre-defined percentage. This makes tax filing much simpler and easier to manage.

The ITR-4 form is a specific form used to file income tax returns if you’re opting for the presumptive taxation scheme. Who can use it? Individuals, Hindu Undivided Families (HUFs), and firms (other than Limited Liability Partnerships or LLPs) who live in India and earn income from a business or profession, and who choose to be taxed under the presumptive taxation scheme. Think of it as a special form for those who want to keep things simple.

How is ITR-4 different from other ITR forms? ITR-4 is specifically for those using the presumptive taxation scheme. Other forms, like ITR-1 or ITR-2, are for different types of income and taxpayers. For example, Sunita Ji, a retired schoolteacher in Indore, couldn’t file ITR-1 correctly because she was unaware of the required schedules. ITR-4 simplifies the process by focusing only on income under the presumptive scheme.

Confused about choosing the right ITR form? Reach out to Prospect Legal for personalized guidance!

Eligibility Criteria for Presumptive Taxation

To use the presumptive taxation scheme, you need to meet certain eligibility criteria under sections 44AD, 44AE, and 44ADA of the Income Tax Act.

• Section 44AD: This is for small businesses.
• Section 44AE: This is for businesses involved in plying, hiring, or leasing goods carriages.
• Section 44ADA: This is for professionals like doctors, lawyers, and consultants.

Turnover Limits:

• Section 44AD: Your total turnover or gross receipts should be ₹2 crore or less. There’s a higher threshold if you opted out of the scheme in previous years and are now opting back in.
• Section 44ADA: This is for professionals with gross receipts of up to ₹50 lakh.

Income Calculation:

• Section 44AD: Your income is calculated as 8% of your turnover. However, if you receive payments through digital modes (like UPI or net banking), the income is calculated as 6% of the receipts.
• Section 44ADA: Your income is calculated as 50% of your gross receipts.
• 44AE: Your income is deemed to be ₹7,500 per month or part of a month for each goods carriage.

For example, Iqbal Bhai from Jabalpur needed help with ITR-4 for his grocery shop because he wasn’t sure if his turnover qualified him for presumptive taxation. Many people are Not sure if eligible for presumptive, which is why professional help is so useful!

Unsure whether you qualify for presumptive taxation? Prospect Legal can assess your eligibility – contact us today!

Step-by-Step Guide to ITR-4 Filing

Here’s a simple guide to filing your ITR-4 online:

1. Log in to the Income Tax e-filing portal: Go to the official website and log in using your PAN, Aadhaar, or User ID and password.
2. Select the Assessment Year: Choose the correct assessment year for which you are filing the return. For example, for income earned in FY 2023-24, you’d select Assessment Year 2024-25.
3. Choose the ITR-4 form: Select “File Income Tax Return” and then choose ITR-4 from the list of available forms.
4. Fill in Personal Information: Enter your personal details like name, address, PAN, Aadhaar number, and contact information.
5. Gross Total Income: Provide details of your business income under the presumptive taxation scheme. This includes your turnover or gross receipts.
6. Deductions: Claim any deductions under Chapter VI-A of the Income Tax Act, such as investments in LIC, PPF, or other eligible schemes.
7. Tax Paid: Enter details of any tax you’ve already paid, such as TDS (Tax Deducted at Source) or advance tax.
8. Other Relevant Details: Fill in any other information required in the form.
9. Verify Details: Double-check all the information you’ve entered to ensure it is accurate.
10. Submit the Return: Once you’re satisfied with the details, submit your ITR-4 form online.

Remember, Ramesh Ji from Bhopal got a notice under Section 143(1) because of incorrect information in his ITR-4 filing. Accuracy is key!

Need a helping hand with your ITR-4 e-filing? The experts at Prospect Legal are here – get in touch now!

Potentially Applicable Laws/Key Governing Laws

Section 44AD & 44ADA of the Income-tax Act, 1961

Defines presumptive income schemes for small businesses and professionals.

Rule 12 – Return Format for ITR-4

Prescribes eligibility and annexure-free filing requirements.

Avoiding Common Mistakes in ITR-4 Filing

Many taxpayers make mistakes while filing ITR-4. Let’s look at some common errors and how to avoid them:

• Wrong Estimation of Income: Always estimate your income correctly based on the applicable percentage (6% or 8% for 44AD, 50% for 44ADA).
• Confused by Turnover Limits: Make sure you understand the turnover limits for presumptive taxation. For Section 44AD, it’s ₹2 crore.
• IT Portal Errors: If you encounter errors on the IT portal, try clearing your browser cache or using a different browser. If the problem persists, contact the Income Tax Department’s helpline or seek professional help.
• Not Verifying Details: Always double-check all the information you’ve entered before submitting your return. This includes your PAN, Aadhaar number, income details, and deductions.

It’s crucial to get these details right to avoid penalties or notices from the Income Tax Department. Ashok Traders in Jabalpur missed the ITR-6 deadline and got a ₹5,000 penalty.

Don’t let errors cost you – Prospect Legal can help you file your ITR-4 accurately. Contact us today!

Deadlines, Penalties and Consequences of Non-Compliance

Meeting the ITR-4 filing deadline is very important. Typically, the deadline is July 31st, but this can be extended by the government. Always keep an eye on official announcements. Missed 31st July deadline? Know the consequences!

Penalties for Late Filing:

Under Section 234F of the Income Tax Act, there are penalties for late filing of ITR-4. The penalty amount depends on your income:

• If your total income is up to ₹5 lakh, the penalty is ₹1,000.
• If your total income is more than ₹5 lakh, the penalty can be up to ₹5,000.

Consequences of Non-Compliance:

• Interest Charges: You may have to pay interest on any unpaid tax.
• Potential Scrutiny: The Income Tax Department may scrutinize your return, which could lead to further inquiries or penalties.

Seema Ji from Bhopal delayed her ITR filing due to confusion over the new rules and had to pay a penalty. Don’t let this happen to you!

Avoid late filing penalties – Prospect Legal ensures timely and accurate ITR-4 filing. Contact us now!

Seeking Professional Help for ITR-4 Filing

When should you consider seeking professional help from a Chartered Accountant or tax consultant? If you’re unsure about the eligibility criteria, income calculation, or how to fill out the ITR-4 form correctly, it’s a good idea to get professional assistance.

Benefits of Professional Assistance:

• Accurate Filing: A tax professional can ensure that your ITR-4 is filed accurately and in compliance with the latest regulations.
• Tax Planning: They can help you plan your taxes to minimize your tax liability.
• Avoiding Penalties: They can help you avoid potential penalties for errors or late filing.

Prospect Legal, based in Bhopal, offers expert ITR filing and tax advisory services across Madhya Pradesh. We help individual taxpayers, retired employees, salaried professionals, freelancers, small businesses, MSMEs, private limited companies, LLPs, and trusts with their income tax needs.

Resources for Finding Tax Professionals:

You can find qualified tax professionals through:

• The Institute of Chartered Accountants of India (ICAI)
• Online directories and search engines

Don’t struggle alone – Prospect Legal’s experts are here to simplify your ITR-4 filing. Contact us today!

Call Us Today: 7000-12-7225
📧 Email Us: prospectlegalbpl@gmail.com

Frequently Asked Questions (FAQ)

Q1: Am I eligible to file ITR-4?

Answer: You are eligible to file ITR-4 if you are an individual, HUF, or a firm (other than LLP) residing in India, and you have income from a business or profession that is taxed under the presumptive taxation scheme (Sections 44AD, 44AE, or 44ADA). Your turnover should be within the prescribed limits (₹2 crore for 44AD, ₹50 lakh for 44ADA).

Q2: What documents do I need to file ITR-4?

Answer: You will typically need the following documents:

• Aadhaar card
• PAN card
• Bank statements
• Details of income from business or profession
• Details of investments for claiming deductions under Chapter VI-A
• Details of tax payments (TDS, advance tax)

Q3: How do I calculate my income under the presumptive taxation scheme?

Answer: Under Section 44AD, your income is calculated as 8% of your turnover (or 6% if receipts are through digital modes). Under Section 44ADA, your income is calculated as 50% of your gross receipts.

Q4: What happens if I miss the ITR-4 filing deadline?

Answer: If you miss the ITR-4 filing deadline, you may have to pay a penalty under Section 234F of the Income Tax Act. The penalty amount depends on your income (up to ₹1,000 if income is up to ₹5 lakh, and up to ₹5,000 if income is more than ₹5 lakh). You may also have to pay interest on any unpaid tax.

Q5: I am facing errors while filing ITR-4 online. What should I do?

Answer: If you encounter errors while filing ITR-4 online, try clearing your browser cache or using a different browser. You can also contact the Income Tax Department’s helpline for assistance. If the problem persists, consider seeking professional help from a tax consultant or Chartered Accountant. Prospect Legal can also assist you with troubleshooting and filing your ITR-4 correctly.

Still have questions about ITR-4 filing? Prospect Legal is here to provide clear and simple answers – contact us today!