Income Tax Filing – The Everlasting Conundrum

Taxation is one subject everyone is always fearful of.

Here is a helpful ready reckoner to find which Income Tax Return you should look to file.

Download here: https://drive.google.com/file/d/1sPWGdHBLozpBFm_JrM8w4lg_IohxyL7r/view?usp=sharing

PERSONAL INCOME TAX IS TO BE PAID ACCORDING TO THE SLAB RATES SET BY GOVERNMENT OF INDIA EVERY YEAR.

BUSINESS OR PROFESSIONAL INCOME TAX IS TO ALWAYS BE PAID ON THE NET PROFIT OF THE BUSINESS.

PRESUMPTIVE INCOME UNDER SECTION 44AD of INCOME TAX ACT, 1961

The scheme for presumptive income under section 44AD states the following conditions needs to be met:

ELIGIBLE BUSINESSES: Any business except the business of plying, hiring or leasing goods carriages referred to in Section 44AE

CONDITIONS OF ELIGIBILITY:

1. Turnover in the business should be less than or equal to ₹2,00,00,000/- (INR Two Crores only).

2. The amounts should have been received in the digital mode of payment (cheques, e-Fund Transfer etc.)

PROFIT ASSUMED: 8% of the total income is assumed as NET PROFIT on which the tax is to be paid.

If the income is claimed under this section 44AD - then there is no requirement for maintenance of accounts with various books under section 44AA and 44AB of the Income Tax Act, 1961.

PRESUMPTIVE INCOME UNDER SECTION 44AE of INCOME TAX ACT, 1961

The scheme for presumptive income under section 44AD states the following conditions needs to be met:

ELIGIBLE BUSINESSES: Business of plying, hiring or leasing goods carriages with less than 10(TEN) vehicles.

CONDITIONS OF ELIGIBILITY:

1. Turnover in the business should be less than or equal to ₹2,00,00,000/- (INR Two Crores only).

2. The amounts should have been received in the digital mode of payment (cheques, e-Fund Transfer etc.)

PROFIT ASSUMED: 6% of the total income is assumed as NET PROFIT on which the tax is to be paid.

If the income is claimed under this section 44AE - then there is no requirement for maintenance of accounts with various books under section 44AA and 44AB of the Income Tax Act, 1961.

PRESUMPTIVE INCOME UNDER SECTION 44ADA of INCOME TAX ACT, 1961

The scheme for presumptive income under section 44ADA states the following conditions needs to be met:

ELIGIBLE PROFESSIONALS: Those engaged in the profession of the below fields:

1.Legal

2. Medical/Healthcare Professionals

3. Literary

4. Software Development/Consulting, Database, ITES, Data Processing, BPO

5. Accounting

6. Architecture

7. Artists amongst a host of others.

CONDITIONS OF ELIGIBILITY:

1. Turnover in the business should be less than or equal to ₹50,00,000/- (INR Fifty Lakhs only).

2. The amounts should have been received in the digital mode of payment (cheques, e-Fund Transfer etc.)

PROFIT ASSUMED: 50% of the total income is assumed as NET PROFIT on which the tax is to be paid.

If the income is claimed under this section 44ADA - then there is no requirement for maintenance of accounts with various books under section 44AA and 44AB of the Income Tax Act, 1961.

The professionals/firms shall be eligible to pay tax at their respective slab rates or applicable tax rates.

BUSINESSES with more than ₹2,00,00,000/- turnover are subject to tax audit under section 44AB of the Income Tax Act, 1961 and cannot use the above three sections for filing their returns.

Tax Audits are required to be done by Chartered Accountants and Forms 3CA, 3CB along with form 3CD have to be filed as applicable case maybe. Please refer to professionals for advise on this.

LAST DATE TO FILE RETURNS:

Individuals: 30th November 2020.

Businesses NOT requiring tax audits: 30th November 2020.

Businesses REQUIRING tax audits: 30th September 2020.

Happy filing! :)