Skip to main content

How to file ITR under presumptive taxation scheme

Best SIP Funds to Invest Online 


Often small businessmen or professionals are unable to maintain books of accounts or financial records or can't afford to hire accountants to do so, which can make the task of filing income tax returns (ITR) difficult for them and can even lead to non-disclosure of income and lower tax compliance. For such professionals and businesses, the Presumptive Taxation Scheme (PTS) is a useful option. It allows you to calculate tax on an estimated income or profit.

This was originally envisaged for small businesses, like kirana stores, to encourage compliance with minimal effort. It makes sure tax is paid and the burden of compliance is minimal, as formal books of accounts may not be maintained

Typically, businesses have to maintain books of accounts, prepare a profit and loss sheet to calculate profit and prepare a balance sheet to file returns, which can be quite a task. "Small businesses who did not have the resources to afford a full-time accountant for complete book keeping and auditing, etc were kept in mind. So, small businesses, professionals who do not have the bandwidth to support full scale accounting and auditing may opt for presumptive taxation," added Gupta.

Here's who can opt for PTS, how to calculate tax under the scheme and how to file returns.

Who can opt for PTS?

The scheme can be adopted by eligible resident individuals, resident Hindu Undivided Families (HUFs) and resident partnership firms. Besides, only specified professionals can opt for this scheme, such as lawyers, doctors, engineer, architect, accountant, technical consultant, interior designers and any other profession as notified by CBDT.

A person adopting PTS can declare income at a prescribed rate and, in turn, is relieved from the job of maintaining books of account

Also, there are restrictions based on the turnover, receipts and nature of business and profession for opting PTS. For instance, only businesses with an annual turnover of less than ₹2 crore can opt for PTS. Similarly, a professional having total receipts below ₹50 lakh in a year and a person who owns not more than 10 goods carriages and is engaged in the business of plying, hiring or leasing such goods carriages can opt for PTS .


Who can't?

Limited liability partnership (LLP) firms and those businesses which claim benefits for being in free or special economic zones (SEZs) or in backward areas can't avail of PTS. Even those who are earning income in the nature of commission or brokerage (such as insurance agents or mutual fund advisers) can't opt for the scheme.

How to calculate tax?

Those who are eligible to opt for PTS need to calculate their earnings based on presumptive basis. Net income is estimated to be 8% or 6% (in case of digital receipts) of gross turnover (for businesses) or ₹7,500 per month for each vehicle where the tax payer plies, leases or hires trucks or 50% of the total gross receipts for the year in case of professionals

For instance, if a businessman opts for PTS and declares the total turnover of the business at ₹1.5 crore in a financial year, business income chargeable to tax so calculated would be ₹12 lakh (8% of ₹1.5 crore). However, if half of the turnover or business income is considered to be received not in cash but through like cheque, draft or online payment, then income can be declared at 6% on that part of the turnover. In the above example, business income chargeable to tax so calculated would be ₹10.5 lakh (6% on ₹75 lakh or half the turnover and 8% on the other half of ₹75 lakh). Assessees are also allowed to willingly declare income at a higher rate than the minimum prescribed rate.

Which ITR to choose?

Taxpayers opting for PTS under Sections 44AD, 44ADA or 44AE are required to file return in Form ITR 4

Keep in mind that ITR-4 has changed a lot this year. The old ITR-4 sought only 4 financial particulars of the business, a) total creditors, (b) total debtors, (c) total stock-in-trade and (d) cash balance. The new ITR-4 form seeks more financial details of business such as amount of secured/unsecured loans, advances, fixed assets, capital account, etc. Further, the new ITR-4 seeks the GSTR number of the assessee and turnover as per the GST return filed by the assessee

Some businesses and professionals can apply for PTS even if they do not have a GSTR number. As per GST regulations, if a professional or businessman had a turnover of less than ₹20 lakh during last fiscal year, then he is not required to obtain the GST registration and he can still opt for the presumptive scheme. They simply need to leave the section asking for GSTR number blank,

Also, if the assessee has capital gains along with business income then ITR-4 cannot be filed; in that case, ITR-3 has to be filed. Remember that the tax department may consider the return filed invalid or not consider it as filed if the wrong ITR form is used.

If you decide to opt for PTS in assessment year 2018-19, you should opt to file ITR under PTS for the next five years. You may opt out of it before five years, but then you will not be allowed to re-opt for PTS for the next five years from the year in which you opted out.



SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Popular posts from this blog

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now