Itr 4

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 February 2017 Repected Sir,
I run our hair saloon and i have annual income near about 2 lac and i want to get loan,
i want to know , which formalities first have to complete for before filling ITR 4

thanks

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
Follow

20 February 2017 File your return ITR -4, prepare your financial accordingly, you should have minimum 3 years return, return GAP between 2 return should be 6 months.

Querist : Anonymous

Querist : Anonymous (Querist)

28 March 2017 thanks sir ,

i want to know about the maintaining records for profession person.

is it compulsory to maintain records ??

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

02 August 2024 When running a hair salon and considering applying for a loan, it’s important to maintain accurate records and complete the necessary formalities for filing ITR-4. Here’s a step-by-step guide:

### **1. Understanding ITR-4 Filing**

**ITR-4:**
- This form is used for taxpayers who are under the presumptive taxation scheme under Section 44ADA or 44AE of the Income Tax Act. For a hair salon, you would typically use ITR-4 if your income is under the presumptive taxation scheme.

### **2. Maintaining Records**

**Is it compulsory?**
- Yes, maintaining records is compulsory for professionals and businesses. Proper record-keeping helps in accurate income reporting and fulfilling tax obligations.

**Types of Records to Maintain:**

1. **Income Records:**
- **Cash Register:** Maintain a daily cash register or log of all income received.
- **Invoices/Receipts:** Issue and keep copies of invoices or receipts for services rendered.

2. **Expense Records:**
- **Receipts:** Collect and retain receipts for all business expenses, such as rent, utilities, products used (shampoo, conditioner, etc.), and other operational costs.
- **Bills:** Maintain bills for purchases made for the salon and any services used (e.g., maintenance).

3. **Bank Statements:**
- Keep a record of all transactions in your business bank account.

4. **Books of Accounts:**
- **Cash Book:** Record all cash transactions.
- **Ledger:** Maintain a ledger for summarizing all financial transactions.

5. **Tax Records:**
- Keep copies of filed tax returns and any correspondence with the tax authorities.

### **3. Formalities Before Filing ITR-4**

**A. Preparing Financial Statements:**
- **Profit and Loss Account:** Prepare a Profit and Loss statement to show your income and expenses.
- **Balance Sheet:** Prepare a Balance Sheet showing your assets and liabilities if required.

**B. Business Records:**
- **Maintenance of Books:** Ensure all records are up-to-date and correctly maintained.
- **Presumptive Taxation:** If you are opting for presumptive taxation under Section 44ADA, maintain records that support your income claim, but detailed books of accounts are not required under this scheme.

**C. Tax Preparation:**
- **Calculate Presumptive Income:** Under Section 44ADA, 50% of your gross receipts are deemed as income. Ensure you report this correctly.
- **Claim Deductions:** Report any eligible deductions and expenses that are permissible under tax laws.

**D. Filing Returns:**
- **ITR-4 Form:** Use the ITR-4 form to file your return. Ensure all fields are filled correctly based on your income and expenses.
- **E-filing:** File your return online through the Income Tax India e-filing portal.

### **4. Loan Application Formalities**

**A. Financial Documentation:**
- **ITR:** Lenders often require ITR for the last 2-3 financial years to assess your income.
- **Financial Statements:** Provide financial statements of your salon.

**B. Other Documents:**
- **Proof of Identity:** PAN card, Aadhar card, or other ID proof.
- **Proof of Address:** Utility bills or other documents as per lender requirements.
- **Bank Statements:** Last 6-12 months of bank statements showing your business transactions.

**C. Maintain Good Credit:**
- Ensure your credit score is in good standing, as this will impact your loan approval process.

### **Summary**

1. **Maintain Detailed Records:** Keep comprehensive records of all income and expenses related to your hair salon.
2. **Prepare Financial Statements:** Prepare accurate financial statements including Profit and Loss Account and Balance Sheet.
3. **File ITR-4 Correctly:** Follow the guidelines for filing ITR-4 under presumptive taxation.
4. **Gather Documentation for Loan:** Collect all necessary documents to support your loan application.

By maintaining proper records and preparing accurate financial statements, you will not only comply with tax regulations but also enhance your chances of securing a loan. If you need further assistance, consider consulting with a tax professional or financial advisor.