How to file itr for the firm providing real estate services

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Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2014 Hello sir/madam,
I have doubt regarding the procedure to file itr. Ok Let me explain the situation here. Here the firm provides real estate services to the clients like selling lands and apartments on behalf of the clients and viceversa. By providing this they receive commission from sellers or purchasers. Now what i want to know is which itr form should the firm file? and how should it show income in itr? The Firm incorporated on 25/06/2013 till today it didn't received any commission (pending) which is likely to be received by next month. The firm is ready to file the return
how it should the pending income? can it should show on accrual basis?

CA Parul Saxena

CA Parul Saxena (Expert)
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18 February 2014 Yes income should be booked on accrual basis.If turnover is less than ITR-4s can be filled...commission received must be shown as income earned during the year.

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Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2014 Firm income should be shown under income from business or profession

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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28 July 2024 To file the Income Tax Return (ITR) for a firm providing real estate services, you'll need to follow specific procedures based on the nature of the business. Here's a detailed guide to help you through the process:

### **1. Determine the Correct ITR Form**

For a firm providing real estate services and earning commission income, the appropriate ITR form is:

- **ITR-3**: This form is used by individuals and Hindu Undivided Families (HUFs) who are in a profession or business, including firms. Since your firm is providing services and receiving commission, ITR-3 is applicable.

### **2. Gather Required Documents**

Before you start filling out the ITR form, ensure you have the following documents:

- **Financial Statements**: Profit & Loss Account and Balance Sheet.
- **Bank Statements**: For all bank accounts of the firm.
- **Invoices**: Details of commission received, if any, and pending invoices.
- **Proof of Expenses**: Receipts for expenses incurred related to the real estate business.
- **PAN and Aadhaar details** of the partners.

### **3. Prepare the Financial Statements**

You need to prepare your financial statements based on the accounting method you follow:

- **Accrual Basis**: Under this method, income is recorded when it is earned, and expenses are recorded when they are incurred, regardless of when the actual cash transactions occur. If your firm follows the accrual basis of accounting, you should record the commission income when it is earned, even if it is not yet received.

### **4. Filling Out the ITR Form**

1. **Login to the Income Tax e-Filing Portal:**
- Go to [Income Tax India e-Filing](https://www.incometax.gov.in/).
- Log in using your PAN and password.

2. **Select the Correct ITR Form:**
- Go to **"e-File"** > **"Income Tax Return"** > **"File Income Tax Return"**.
- Choose **"ITR-3"**.

3. **Fill in the Details:**

- **Part A – General Information:**
- Enter details about the firm, including PAN, address, and nature of business.

- **Part B – Profit & Loss Account:**
- Enter the details of the firm's income, including commission earned.
- If commission is pending but earned, include it in the income.

- **Part C – Balance Sheet:**
- Enter the assets and liabilities of the firm as on the balance sheet date.

- **Part D – Computation of Income:**
- Calculate the net profit based on the Profit & Loss Account.
- Deduct any allowable expenses.

- **Part E – Tax Details:**
- Enter details of tax payments, including TDS if applicable.

4. **Verify and Submit:**
- Review all the details filled in the form.
- Submit the return online.
- **E-Verify** the return using Aadhaar OTP, net banking, or electronic verification code (EVC). Alternatively, you can send a signed copy of ITR-V to CPC Bangalore if you choose not to e-verify.

### **5. Treatment of Pending Income**

- **Accrual Basis**: Even if the commission is pending, it should be included in the financial statements and tax computation for the year in which it was earned.
- **Cash Basis**: If you follow the cash basis accounting, you would record the income in the year it is actually received. However, this is less common for businesses, and the accrual basis is generally preferred for recognizing income and expenses.

### **6. Filing Deadlines and Penalties**

- Ensure the return is filed before the due date to avoid penalties.
- For firms, the due date for filing ITR is generally 30th September of the assessment year. However, if the firm is required to get its accounts audited, the due date may be extended to 30th November.

### **Additional Resources**

- **Income Tax India e-Filing Website:** For form downloads, filing procedures, and help.
- **TaxGuru and ClearTax:** Provide tutorials and articles on filing ITR for different types of income and businesses.

By following these steps, you can ensure accurate filing of the firm's income tax return. If you're unsure about specific entries or need assistance, consulting a tax professional or accountant might be beneficial.