Income tax filing for presumptive taxation scheme in India
Income tax filing for presumptive taxation scheme in India
Income tax filing for presumptive taxation scheme in India
1. Eligibility for the Presumptive Taxation Scheme:
- The scheme is available for:
- Resident individuals, Hindu Undivided Families (HUFs), and partnerships whose turnover or gross receipts from a business do not exceed ₹2 crores.
- Professionals whose gross receipts do not exceed ₹50 lakhs.
2. Choose the Appropriate ITR Form:
- For individuals and HUFs, select ITR 4 (Sugam) if you are opting for the Presumptive Taxation Scheme.
- For professionals, use ITR 4 (Sugam) or ITR 3, depending on the type of income and whether the Presumptive Taxation Scheme is opted for all the professions mentioned in Section 44ADA.
3. Declare Presumptive Income:
- Under the Presumptive Taxation Scheme, you are deemed to have earned a certain percentage of your total turnover as income, and you don't need to maintain detailed books of accounts. For businesses, presumptive income is generally calculated as a percentage (usually 6% or 8%) of the total turnover or gross receipts. For professionals, it is deemed to be 50% of gross receipts.
4. Prepare Your Income Tax Return:
- Fill in all the required details in the ITR form, including your income from the business or profession under the Presumptive Taxation Scheme.
5. Claim Deductions (if applicable):
- You cannot claim any deductions under Sections 30 to 38 or 40 to 43B if you opt for the Presumptive Taxation Scheme. However, you can claim deductions under Section 80, such as 80C (for investments), 80D (for health insurance premiums), etc.
6. Validate the ITR Form:
- Review and validate the filled ITR form to ensure accuracy and completeness.
7. Submit the ITR Form:
- After validating the return, submit it on the income tax e-filing portal.
8. E-Verify the ITR (if required):
- After filing the return, e-verify it using any of the available methods like Aadhaar OTP, Net Banking, Demat Account, Bank Account, or EVC (Electronic Verification Code).
9. Preserve the ITR Acknowledgment:
- Keep a copy of the ITR-V (acknowledgment) as proof of filing the income tax return.
Filing income tax returns under the Presumptive Taxation Scheme simplifies the compliance process for small businesses and professionals and allows them to pay taxes at a predefined rate without the need for maintaining detailed books of accounts. However, it is crucial to accurately report your income and adhere to the prescribed conditions of the scheme to avoid any penalties or legal issues.
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