Income Tax Return: Filing Sugam ITR-4S is easy. You can finally bid adieu to your CA
Here's how we are breaking it down for the MSMEs.
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The Presumptive Taxation Scheme (ITR-4 or Sugam) enables small businesses and professionals to conveniently file ITR at a fixed presumptive income rate under section 44AD (for small businesses); section 44ADA (for professionals); and section 44AE (for transporters).
By qualifying for presumptive taxation, one need not maintain books of accounts or audit tax. The simplified taxation system overcomes the instinctive dependence of SMEs on charted accountants for filing ITR. The benefits can be drawn only by resident Indians, including individuals, HUFs or partnership firms. No NRI or LLPs can make use of the scheme.
For financial year 2018-19, businesses with less than Rs 2 crore annual sales can file ITR 4s under section 44AD at presumptive income of 6 per cent of gross receipt for digital/non-cash receipts and 8 per cent of gross receipt for cash payments. Digital transactions categorically here include money received through cheque, bank draft, RTGS, NEFT, ECS, IMPS or credit/debit cards.
The presumptive levels (6 per cent or 8 per cent) are minimum taxable levels. For lower income declaration, the business is required to maintain books of accounts and tax audit. If one opts out of presumptive taxation after one year on lower income grounds, tax audit is mandatory for next five years. They cannot re-opt for presumptive scheme for next 5 years.
Also, one can not apply under section 44 AD, if they fall under section 44ADA or earn through commission.
The benefits can be drawn only by resident Indians, including individuals, HUFs or partnership firms.
Under Section 44 ADA of Income Tax Act 1961, resident Indians engaged in various professions such as legal, medical, engineering, IT, or other professions notified by CBDT can file ITR at presumptive income of 50 per cent on gross receipts. The eligibility is not limited to professional degree or qualification. However, the annual business generated should not be more than Rs 50 lakhs. The presumptive earnings are considered final; you cannot claim further business expenses. Besides, you are required to pay advance tax before March 15 of previous year or interest as per section 234C.
After submitting the return, save the acknowledgment number received.
The presumptive income under section 44AE provides relief to individuals, HUFs, companies involved in business of transportation such as plying, hiring or leasing of goods carriages. Also, they must not own more than 10 vehicles at any time during the financial year. The presumptive income is fixed at Rs 7,500 per vehicle. Here again, if you want to declare lower income, there is an underlying need to maintain books of accounts and get tax audited.
Filing ITR 4S form
The ITR-4S (Sugam) form is divided into 4 parts: A, B, C and D. You are required to share general information, gross income, deduction and taxable income, tax calculations and status respectively in each part.
Like ITR 1, ITR 4 S can be filled online and offline. However, it is an annexure-less form, i.e, documents attachment is not required. You must use I-T department’s official site to file ITR. It is hassle free and convenient to download the form and upload it later on. An online tax calculator is also there to assist you.
After submitting the return, save the acknowledgment number received. Those who haven’t yet created digital signature must verify ITR by sending it to CPC office in Bengaluru within 120 days.
Anyone who has opted for presumptive taxation cannot further claim for business expenses, however deductions on investments, education loan interest and home loan interest and repayment etc are allowed to all individuals and HUFs. So, you can independently file return without being intimidated by the tax system. Choose your form and file it hassle-free.