ITR-4S is a special case ITR, applicable for businesses where income is calculated on 'presumptive method'. In simple words the presumptive method lets you report your income as 8 per cent of your gross receipts (as per section 44AD of the income tax act) or as Rs 7,500 per month for each vehicle if you are in the business of plying, leasing or hiring trucks (as per section 44AE).
This return form can be used by individuals, HUFs and partnership firms (other than Limited Liability Partnerships) whose total income includes the following:
- Income from salary/ Pension
- Income from one house property (excluding cases where loss is brought forward from previous years)
- Income from other sources (excluding winning from lottery and income from race horses)
- Business income where such income is computed in accordance with special provisions referred to in section 44AD and 44AE (i.e. on presumptive basis)
- Agricultural income of INR 5,000 or less
- No claim of relief under section 90 and/ or section 91
Key Changes
Partnership firms other than Limited Liability Partnership can now use ITR 4S form
Detailed changes in the notified return forms
Details of assets and liabilities held as on March 31, 2016
Taxpayers having income exceeding Rs 50 Lakhs are required to disclose their movable & immovable assets at cost. Assets which are required to be disclosed are –
- Land
- Building
- Cash in hand Jewellery, bullion etc.
- Vehicles, yachts, boats and aircraft
- Liability in relation to above assets
Presumptive Taxation Scheme of Section 44AD
These eligible assesses can declare income on estimated basis in respect of any business except the business mentioned below ,if his gross turnover or gross receipts in the previous year does not exceed Rs. 2 Crore:-
Thus income on estimated basis cannot be declared u/s 44AD if the gross turnover or gross receipts exceeds Ra. 2 crore during the financial year. This is because if we declare income u/s 44AD, which is not less than 8%, then we are not required to maintain books of accounts as per the provisions of Sec 44AD
However sec 44AB states that audit is compulsory in case the turnover exceeds Rs. 2 crore during the year which requires proper maintenance of books of accounts. Hence an assessee can not apply Sec 44 AD and declare income on estimated basis if the gross turnover or gross receipts exceeds Rs. 2 crore during the financial year
Presumptive Taxation Scheme of Section 44ADA
The presumptive taxation scheme of section 44ADA is designed to give relief to small taxpayers engaged in specified profession.
A person resident in India engaged in following professions can take advantage of presumptive taxation scheme of section 44ADA:-
- Legal
- Medical
- Engineering or architectural
- Accountancy
- Technical consultancy
- Interior decoration
- Any other profession as notified by CBDT
In case of a person adopting the provisions of section 44ADA, income will be computed on presumptive basis, i.e. @ 50% of the total gross receipts of the profession. However such person can declare income higher than 50%.
In other words, in case of a person adopting the provisions of section 44ADA, income will not be computed in normal manner but will be computed @50% of the gross receipts.
The presumptive income computed @ 50% is the final income and no further expenses will be allowed
Presumptive Taxation Scheme of Section 44AE
The presumptive taxation scheme of section 44AE can be adopted by a person who is engaged in the business of plying, hiring or leasing of goods carriages and who does not own more than 10 goods vehicles at any time during the year.
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