Income tax for self-employed

Tax queries 2390 views 11 replies

Krishna Srinivasan

Team Lead

31 Points Joined November 2009

Hello Sir,

I would like to know what is the process for filing income tax for self-employed. My wife is working from home and earning more than Rs.30000 per month. The following are the carious source of the income:

The income is received through cheque through the company.
Some of the income directly deposited to the bank account by the customer
Other income would come through the PayPal (Online money transfer)

The nature of the business is doing job through internet and managing the websites.

I am not sure how to show the income and file the Income Tax returns. I think she has to use the ITR-IV for filing the returns. Is it required to maintain the books for filing the returns?. Should we hire auditor for this?

Please help me on this doubts and provide good suggestions.

Thanks,

Krishna

Replies (11)

Mary Asha

Chartered Accountant

112 Points Joined February 2011

Hi... Your wife's income would fall under section 28 that is profession income.. If her income is more than 1,50,000p.a in last three preceding previous years(current year if it is new) then she definitely have to maintain books of accounts u/s 44AA.. And if her income is more than 15 lacs then she is suppose to tax audit it u/s 44AB.. Hope I helped you..

Krishna Srinivasan

Team Lead

31 Points Joined November 2009

Thank you for the reply. Find the below more details.

Her income is not more than 150000 in the three previous years.
She has not filed the ITR last year because there is no income
From this year onwards, her total income would be Rs.600000 per year

What shall I do?

Mary Asha

Chartered Accountant

112 Points Joined February 2011

In that case she must maintain books of accounts u/s 44AA.. Because she had no income for last 3years to be considered.. Hence, This year's income will be taken into consideration.. And as her income is exceeding more than 1,50,000.. She has to maintain books of account...

Krishna Srinivasan

Team Lead

31 Points Joined November 2009

HI,

Here my doubt is, what is meant by maintaining the books of accounts? Should I hire an auditor to do that? Please explain me.

Thanks,

Krishna

Mary Asha

Chartered Accountant

112 Points Joined February 2011

Maintaining books of accounts means maintaining prescribed books and records like cash book,journal,ledger,vouchers,bills etc.. And if you can't maintain this by your own.. You definitely have to hire an accountant.. Not an auditor indeed...

Krishna Srinivasan

Team Lead

31 Points Joined November 2009

HI, I have spoke to tax consultant regarding this. They said I need not maintain a books because I am running a small business and just need to file the ITR-IV S.

Please let me know.