27 May 2016
Sir, I need help regarding Income tax return of News Paper Distributor Agency, My friend taken agency for news paper distribution in Mumbai, he will go to door to door offices / house in morning and distribute News paper and collect monthly fees from client and also make payment in cash for news paper purchase from News paper printing press Like (Times of India, Nav Bharat, Hindustan times etc.)
1. can we file ITR-4S or ITR 4 he will not maintain Books of accounts, he just receive cash from client and make payment in cash to Agency who printing news paper.
2. can he file return U/s 44AD by booking profit 8% of turnover
3. In Which head Income of News paper distributor shown in income Tax return - Whether PGBP or Income from other source (commission), He own purchase & Sale by self.
27 May 2016
you are taking the newspaper from press and then you sale and collect the amount . pls see the agreement with the newapaper printing press and agency. its found normally agency, newspaper take security from the you and give you intt on the security and commission on the basis of the sale of newspaper copy sold by you , you are collecting cash and send the amount to newspaper company. and newspaper press deduct the tds on Commission. as per income tax tax a agent can collect the cash on behalf of the principle and make payment in cash . there in no problem under the income tax act. bur u/s 44AD following business not come The scheme of section 44AD is designed to give relief to small taxpayers engaged in any business, except the following businesses: Business of plying, hiring or leasing of goods carriages referred to in section 44AE. A person who is carrying on any agency business. A person who is earning income in the nature of commission or brokerage
so you cannot file ITR4S, you have to file form 4 and prepare books of accounts.
31 July 2024
For a news paper distributor, the type of income tax return form to file and the applicability of section 44AD depends on the nature of the business and how the transactions are handled. Here’s a detailed guide based on the information provided:
### 1. Choice of ITR Form
**ITR-4S (Sugam)**: This form is for presumptive income from business and profession. However, since ITR-4S (Sugam) was replaced by ITR-4 (Sugam) for presumptive taxation under sections 44AD, 44ADA, and 44AE, it is more relevant.
**ITR-4**: This form is for individuals, HUFs, and firms (other than LLP) having income from a business or profession where such income is computed on a presumptive basis.
Given that the distributor is not maintaining books of accounts and wants to declare income under the presumptive taxation scheme, **ITR-4** would be suitable.
### 2. Applicability of Section 44AD
Section 44AD allows small businesses (with turnover up to ₹2 crore) to declare 8% (or 6% for digital transactions) of their turnover as income and pay tax on it.
- **Yes**, the newspaper distributor can file the return under section 44AD by declaring 8% of the turnover as profit if he is not maintaining regular books of accounts.
### 3. Head of Income
The income from the newspaper distribution business should be shown under the head **"Profit and Gains from Business or Profession (PGBP)"**. It should not be shown as "Income from Other Sources" because the distributor is actively engaged in the business of purchasing and selling newspapers.
### 4. Principal to Principal Basis
If the distributor purchases newspapers at Rs. 4 and sells them at Rs. 7, this constitutes a business transaction on a principal-to-principal basis rather than earning commission. Hence, the profit should be treated as business income.
### Summary and Steps:
1. **ITR Form**: File **ITR-4**. 2. **Presumptive Taxation**: Declare income under section 44AD, showing 8% of the gross turnover as profit. 3. **Head of Income**: Show the income under "Profit and Gains from Business or Profession (PGBP)".
### Sample Steps for Filing ITR-4 under Presumptive Taxation:
1. **Calculate Turnover**: Determine the total amount received from clients for the newspapers sold. 2. **Determine Presumptive Income**: Calculate 8% of the total turnover as the presumptive income. 3. **Fill in ITR-4**: Enter the details in the ITR-4 form, showing the total turnover and the calculated presumptive income. 4. **No Requirement to Maintain Books**: Since the income is being declared under presumptive taxation, there is no need to maintain detailed books of accounts. 5. **File Online**: File the return online through the Income Tax Department’s e-filing portal.
### Example Calculation:
If the total turnover (total sales) is ₹1L, the presumptive income to be declared under section 44AD would be: \[ \text{Presumptive Income} = \text{Total Turnover} \times 8\% = ₹1L \times 0.08 = ₹8,000 \]
This ₹8,000 should be shown as business income in ITR-4 under the head "Profit and Gains from Business or Profession".
If you need further assistance with specific sections of the form or detailed entries, feel free to ask!
CAclubindia
