02 April 2012
But if an individual has 2 business.......on which 1 is under tax audit and on other business he take sec. 44AD benefit........so how he show his income of both business in ITR-4...??????
01 August 2024
Filing the Income Tax Return (ITR) for an individual who has two businesses—one subject to tax audit and the other availing the benefit of Section 44AD—requires careful entry of details in the appropriate ITR form. For this scenario, you will use ITR-4 for the Section 44AD business and ITR-3 for the tax audit business.
### Filing ITR-4 (Presumptive Taxation under Section 44AD)
For the business availing Section 44AD benefits, you need to fill in the ITR-4 form, which is designed for individuals, HUFs, and firms (other than LLPs) having income from a presumptive business under Sections 44AD, 44ADA, and 44AE.
### Filing ITR-3 (Income from Business or Profession)
For the business subject to tax audit, you need to use ITR-3, which is applicable for individuals and HUFs having income from a proprietary business or profession.
However, when an individual has both types of business income, the correct approach is to file ITR-3 because it accommodates detailed reporting for both tax audit and presumptive income under Section 44AD.
### Steps to File ITR-3 for Mixed Business Income (Tax Audit and 44AD)
1. **Download the ITR-3 Form**: - Access the ITR-3 form from the Income Tax Department’s e-filing portal.
2. **Personal Information**: - Fill in the personal information section with details such as name, address, PAN, and contact information.
3. **General Information**: - Fill in the general information section about your business and profession.
4. **Part A: General Information**: - Enter the general information about both businesses.
5. **Schedule BP: Income from Business or Profession**: - **Tax Audit Business**: - Fill in the details of your business income, expenses, and profit and loss as required for a tax audit. - Provide details of gross receipts, total sales, gross profit, expenses, and net profit. - **Presumptive Income under Section 44AD**: - Report the gross turnover or gross receipts from the business under Section 44AD. - Calculate and enter the presumptive income at 8% (or 6% if receipts are through digital means) of the gross turnover or receipts.
6. **Balance Sheet and Profit & Loss Account**: - Enter the details of the balance sheet and profit & loss account for both businesses. - For the Section 44AD business, you can provide a simplified profit and loss account since detailed reporting is not required.
7. **Schedules for Financial Details**: - Fill in other schedules as applicable, such as Schedule HP (House Property), Schedule CG (Capital Gains), Schedule OS (Other Sources), etc.
8. **Tax Computation and Payment**: - Compute the total taxable income by combining the incomes from both businesses. - Calculate the tax liability, including any applicable advance tax or self-assessment tax. - Provide details of taxes paid, including TDS, advance tax, and self-assessment tax.
9. **Verification and Declaration**: - Verify the information entered in the return. - Sign the declaration section, either electronically using a digital signature or through EVC (Electronic Verification Code).
10. **Submit the ITR**: - Generate the XML file and upload it to the e-filing portal. - Verify the return using one of the available verification methods.
### Example Entries in ITR-3 for Mixed Business Income
1. **General Information**: - Section A (General): Enter personal details and business information.
2. **Schedule BP**: - For Business 1 (Tax Audit): - Report gross receipts, expenses, and profit. - For Business 2 (Section 44AD): - Report gross turnover/receipts and calculate presumptive income at 8% or 6%.
3. **Schedule P&L**: - Detailed profit and loss account for Business 1. - Simplified profit and loss for Business 2.
4. **Schedule BS**: - Balance sheet details for both businesses.
By following these steps and ensuring accurate and complete reporting of all required details, you can correctly file your ITR for an individual with mixed business income subject to tax audit and Section 44AD. If in doubt, consulting a Chartered Accountant or tax professional is recommended to ensure compliance and accuracy.
CAclubindia
