I am software consultant and proivde services overseas. I have been filing presumtpive income from last few years as gross income was less than 50lakh but this year I have crossed the limit with marginal proportion.
A user name Kamal requested some similar question to you on this thread.
You commented as below “You can either opt for Section 44AD or start maintaining books of accounts since you have crossed the threshold of Section 44ADA”
My questions are
I understand we need to start maintaining books of accounts if threshold is crossed and we cannot opt for presumptive income i.e 44ADA or can we ? Please guide as your comment is not clear
if next year income goes less than 50Lakh then can I opt for 44ADA presumtpive income again next year or I have to wait for 5 years ? It is government asking to opt out of 44ADA as limit cross, so does the rule allow to opt in back next year if income is lower than the limit of 50lakh ? I am not opting out of presumtpive income by willingness but by law. I was filliing presumtive income 44ADA scehme from 4+ years.
Tax audit is mandatory for professionals if gross income is 50lakh and above only ? i.e if next year income is less than 50lakh than tax audit is not required (considering the case I cannot opt for presumtptive income next year)?
Please guide on this. It will be very helpful. Thanks
I noticed that Quicko wants me to add a balance sheet for this year’s ITR filing. Normally I file ITR-4 as I have opted for professional presumptive income and I never had to attach a balance sheet.
Is this new requirement because of the trading activity I’ve done this year? I have suffered a nominal loss of Rs. 50 and I have no profits from stock trading. If yes, then can I just not report this loss as I have no interest in carrying it forward or deducing this from my taxable income? What are the consequences if any?
More importantly, am I even required to disclose my personal assets in the ITR? Or is it only for assets related to businesses? I don’t have a business as I operate as an individual, so all transactions happen through my personal savings accounts.
Thank you in advance for any advice and clarification.
Hey, while filing ITR 4, you are not required to show the complete balance sheet. however, you need to disclose the following details while filing ITR
Total debtors,
Creditors
Stock in trade and cash balance at the end of the financial year.
For your trading business, as the amount of loss is not material, you can choose to not report the same if you don’t wish to carry forward the loss.
For the income head business and profession, you don’t need to report your personal assets or liabilities. However, you need to report those assets and liabilities which are directly related to your business.
I had invested some money in alternate assets via http://gripinvest.in/ and they have shared with me Schedule-IF and Schedule-BS details to be used for filing my ITR. They pool investors for a certain investment and form a LLP where each investor is a partner. Every month, they distribute some portion of capital invested + profits.
I am a freelancer and have been filing my ITR under section 44ADA. I wanted to know if entering the BS details is mandatory in my case. If yes, can I leave the P&L section empty as they haven’t shared that with the investors.
Does cash in hand include fixed deposits? I have exempt capital gains from mutual funds and quicko is auto selecting itr 3…it’s asking for balance sheet to be filled. I don’t have any creditors or debtors but have a few fixed deposits and savings accounts which have some balance. In quicko it just says assets and liabilities can’t be zero
@karan Yes, Cash in hand includes fixed deposits as well.
Quicko automatically fetches your ITR Form Number, depending on the income situation entered.
So, if you have intraday or FnO transactions, then it is considered income from business & profession; hence, you are eligible to file ITR 3.
You can enter the balance with your broker and proceed to e-file.
Thanks Shrutika. I have income from medical practice and for that I am filling under 44ada. As soon as I add exempt income from mutual funds it becomes itr 3 from itr 4. There’s no intraday or fno.
If presumptive taxation caps or allows income tax to be declared as percentage of topline and without maintaining books, why should one declare more profits?
The presumptive taxation scheme was introduced by the Income Tax Act, 1961 to give relief to small taxpayers from the tedious job of maintaining books of account and from getting the accounts audited.
It can only be opted by small businesses with turnover upto INR 2 crore and by professionals having gross receipts up to INR 50 lacs
Under the presumptive taxation scheme, one cannot claim business-related expenses like electricity charges, depreciation cost of electronics etc.
I have a few questions. Can someone please clarify them? Thanks!
Background:
Have a salary income (10-15 LPA)
Income as a freelancer (Less than 20 lakhs INR, Paid in EUR)
Capital gains from mutual funds (Not every year)
Questions:
Under presumptive taxation, do all freelancers come under “Profession”. My freelance activity is a mix of management consulting and writing, that does not fall under the specified professions under Section 44ADA. Can I file the income under Section 44AD?
Can I file salary income and capital gains normally and still claim presumptive taxation for the freelance income?
Which ITR do I need to file? Since, I will not have capital gains every year will that change or I need to file the same form every year?
In case of freelance income, it depends on the contract you have for freelancing (in terms of salary or profession or business income)
In case nothing is specifically mentioned, you can report your management consultancy & writing u/s 44ADA as a Profession under category 16013, as shown in the screenshot below.
Yes, you can file salary income and capital gains normally and still claim presumptive taxation for the freelance income.
According to the link shared by you, Capital Gains can be reported only under ITR 2 and 3 but presumptive income is under ITR-4. So, how can I claim presumptive when I have capital gains too?
I would like to clarify to you that, ITR 2 is filed when you have capital gains income, and ITR 3 is filed when you have business & profession income. Intraday and FnO transactions are considered as income from business & profession under section 43(5) of the income tax act, and hence eligible to file ITR 3 in this case.
However, ITR 4 is filed when you have opted solely for presumptive taxation.
Moreover, ITR 3 can be filed if you have presumptive business & profession income and capital gains income.
