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SUGAM ITR-4S

When it comes to choosing the right business, more often than not, you would have made the perfect choice. You have identified your strengths when it comes to a product or service, developed a strong marketing strategy, and finally found success with skyrocketing sales and healthy profits.

However, you also need to ensure that your business runs smoothly, there are certain responsibilities that you must not forget. One of these responsibilities is ensuring that you appoint a qualified chartered accountant to maintain your book of accounts as well as calculate the correct amount of tax payable by you.

The other responsibility is to file your income tax return on time using the right income tax form.

You need to file the Sugam ITR - 4S form if you have chosen the presumptive income scheme as per Section 44AD and 44AE of the Income Tax Act, 1961. If you have a small business, then instead of maintaining books of accounts, you can declare your income on a presumptive basis, rather than on an actual basis. As per presumptive taxation, your income is calculated on a percentage of sales. The due date for filing this form is 31st July of every year. From FY 2016-17 (AY 2017-18), the ITR-4S return form has been discontinued.

Who can use the ITR 4S return form?

You can use the ITR 4S form if you are in retail, wholesale, civil construction, and so on. But, you cannot use this form for:

  • Commission or brokerage business.

  • Agency.

  • Leasing, hiring, plying goods carriage.

  • Legal, information technology, medical, company secretary, engineering, interior decoration, architectural, film artist, or accountancy profession.

Taxation under Section 44AD, 44AE, and 44ADA

These are different sections under the Income Tax Act which deal with presumptive taxation. We will find out what each of these sections deal with.

Section 44AD

To simplify the taxation requirements of small businesses, the Income Tax department has allowed them to declare their income as a percentage of their sales and exempted them from maintaining books of accounts.

  • Your net income is calculated at 8% of your gross receipts. If you collect your gross receipts digitally, the rate is 6%.
  • Books of accounts are not required.
  • You pay the entire Advance Tax by the 15th of March every year in one go.
  • Your gross receipt need to be less than Rs. 2 crores annually.
  • You need to be an Indian resident.
  • Commission, brokerage, and agency businesses are not eligible and neither are certain professionals. Those dealing in hiring, plying, or leasing of trucks are also excluded.
  • Business expenses cannot be deducted. Partnership firms can deduct partner's remuneration and interest paid to partners.
  • If you declare more than 8% gross receipts, you pay a higher tax. If, however, you declare a lower income, you will have to maintain books of accounts.

Section 44AE

This is applicable to tax payers dealing in the hiring, leasing, and plying of trucks.

It is important to note that:

  • Net income per heavy goods vehicle is limited to Rs. 7,500/- per month.
  • Books of accounts are not required.
  • Advance tax to be paid once by the 15th of March every year.
  • Business expenses not deductible.

Eligibility:

  • You need to be in the truck leasing business.
  • The total number of goods carriages cannot exceed 10.
  • All tax payers can avail of this scheme including companies.

Section 44ADA

This section applies to professionals having annual gross receipts less than Rs. 50 lacs.

The presumptive tax rate is fixed at 50% of the annual gross receipts.

The following professionals are eligible:

  • Medical
  • Legal
  • Engineering
  • Accountancy
  • Architecture
  • Interior decoration
  • Technical consultancy
  • Authorised representatives (a person representing someone for a fee before a tribunal and so on)
  • Certain sports professionals
  • Film artists
  • Company secretaries
  • Information Technology

Eligibility of Sugam ITR 4S

There are certain eligibility criteria you need to fulfil to qualify for this scheme. They are:

  • Gross receipts

    Your gross receipts need to be under Rs. 2 crore annually.

  • Residential status

    This scheme can only be availed by citizens of India.

  • Applicability

    This scheme is only open to individuals, HUF (Hindu Undivided Family), or partnership firms. Companies are not eligible.

Features of Sugam ITR 4S

It is important for you to understand the features of this scheme before filing your return. These are the important features of the Sugam ITR-4S form:

Calculation of income

Your Net Income (Gross income less cost of goods sold, expenses, and taxes) is presumed to be 8% of the gross receipts that you have earned during a financial year. If you receive the gross receipts digitally, then the rate of gross receipts is 6% as opposed to 8% of gross receipts in cash.

Books of accounts

You are not required to maintain your books of accounts.

Advance Tax

In you are an owner of such small businesses, the full advance tax needs to be paid by the 15th of March every year. Payment of advance tax in quarterly instalments in June, September, and December is not required.

Business Expenses

You will, however, not be allowed to deduct business expenses against the income declared by you. If you have multiple businesses, then presumptive taxation will be applied only to the business which is assessed under Section 44AD. The same rule applies with payment of Advance Tax that is the business being assessed under Section 44AD. Advance tax has to be paid for your other businesses if the tax liability exceeds Rs. 10,000/- per year.

You cannot apply for this scheme if you have claimed deduction under Section 10, 10A, 10BA, 80HH to 80RRB in that financial year.

Structure of the ITR-4S form

Let us understand the format of the ITR-4S that you need to fill up.

Various Parts

  • Part A: General information
  • Part B: Gross total income from the 5 different income heads
  • Part C: Deduction and total taxable income
  • Part D: Tax computation and tax status

Verification and signatures required

Schedule BP

Business income details to be provided. You need to provide computation of presumptive income under section 44AD and 44AE.

Financial Particulars of business

  • Schedule IT: Self-assessment tax and advance tax payment statement.
  • Schedule TCS: Tax collected at source statement.
  • Schedule TDS1: Tax deducted at source statement - salary.
  • Schedule TDS2: Tax deducted at source statement - income apart from salary.
  • Supplementary Schedule TDS1.
  • Supplementary Schedule TDS2.
  • Supplementary Schedule IT.
  • Supplementary Schedule TCS.

How to file the Sugam ITR - 4S form?

You can file your Sugam ITR - 4S online or offline.

Offline

You can either file it through a paper form or provide a bar-coded return.

Online

You need to file your returns electronically, if you earn more than Rs. 5 lacs annually, have assets outside India, or have claimed relief under Section 90/90A/91 relating to those who come under FSI or Schedule TR.

Returns can be filed electronically using a digital signature or entering the data electronically and then submitting the verification of the return through ITR-V.

FAQs

Who are eligible to file ITR 4-S?

ITR 4-S can be filed only by individuals, HUFs, or partnerships with income from the undermentioned sources:

  • Business income according to presumptive taxation scheme under section 44AD and/or 44AF of the Income Tax Act.

  • Salary Income.

  • Income from House Property (except when accumulated losses from previous years are brought forward).

  • Income from other sources such as savings account interest, fixed deposit interest, but excluding income from lotteries and race horses.

Who are not eligible to file ITR 4S?

Individuals, HUF, or partnership firms having income from the following sources cannot file ITR 4S:

  • Where there are more than one house property where you are earning an income.

  • Loss from house property in the previous year brought forward.

  • Capital gains earned from sale of shares, mutual funds, property, and so on.

  • Income derived from business of a speculative nature.

  • Income from agency, brokerage, commission and profession

  • Agricultural income in excess of Rs. 5000.

  • Income from gambling activities like lottery, horse racing, card games, and so on.

  • Income earned from a foreign source.

  • Where you intend to claim double taxation benefit under Section 90/90A/91 of the Income Tax Act.

  • If you are a resident Indian and have either bank accounts or foreign assets like property, shares, and so on.

Who needs the ITR 4S Sugam form?

This form can only be filled up by individuals, small businesses, and Hindu undivided families with presumptive income under section 44AD and 44AE as well income from salary or pension, income from a single house property, and income from other sources (other than lotteries and horse racing). This form can be submitted manually or electronically. No documents need to be affixed with this form.

Do I need to keep a copy of the income tax return?

Yes, a copy of the income tax return needs to be kept as the income tax department can initiate legal proceedings against you 4 to 6 years prior to the current financial year.

Simplify Your Taxes with Sugam ITR - 4S

If you are an individual, HUF, or partnership firm with a small business having a turnover of not more than Rs. 2 crores annually, then you are eligible for the presumptive taxation scheme under Section 44AD/44AE/44ADA (depending on what category you belong to). You also need to ensure that the other criteria like no income from speculative business, lotteries, and so on. Then, all you need to do is pay tax online or offline at 8% of your net income and you are done! Gain from Sugam ITR - 4S and do business with complete peace of mind!

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