Income Tax Filing For Self-Employed

July 25, 2019


All income of the individual is grouped under the below provided five heads:

1.       Income from Salary
2.       Income from House Property
3.       Profit and gain from Business or Profession
4.       Capital Gain
5.       Income from Other sources

Who is considered as Self-Employed?

Self-employed or independently employed refers to an individual who offers his or her services to various firms without a long term contract with any of the company. Income Tax Act, 1961, demand tax on the pay of self-employed people under the head “Profit and increase from Business or Profession”. The business has been characterised in the Act as, “any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture”. Be that as it may, the Profession has not been characterised in the Act. Profession additionally incorporates Vocation as given in the Act. Along these lines, a painter, a carver, a writer, an advocate, a physician, an astrologer, an architect falls under vocation.

Benefit ought to be figured in the wake of deducting all misfortunes and costs met for procuring the income in the customary course of business, profession or employment. Proficient Income workers need to get their accounts evaluated by Chartered Accountant and submit assessment tax audit if their gross receipt is Rs. 50 lakhs or more in a financial year.

Self-Employed Tax Filing

In ordinary tax filing process independent worker, they need to document Income Tax Return – 4 (ITR-4). They are permitted to claim every one of the costs which are acquired to earn returns from vocation. These costs are deductible subject to legitimate evidence in the record. Under the possible plan, it is regarded to have been permitted the deduction of the considerable number of costs and devaluation to arrive at benefit from the profession.

Presumptive Taxation

Government has launched a presumptive tax collection scheme for expert earners whose total gross receipts are not as much as Rs. 50 lakhs in financial year and organisations whose turnover is not as much as Rs 2 crore. Under this plan, they do not need to keep every such record, books of records, and so forth. The benefit is presumed at 8% of gross receipts for business and half of the gross receipts of vocation in a financial year and in like manner they need to settle Income tax according to Income assessment rates pertinent on them. This plan is discretionary for them. In any case, if they do not go under the plan, they need to get their books of account evaluated by Chartered Accountant and in like manner file the Income Tax return and pay tax.

Under the presumptive scheme, assesses can guarantee assessment saving tax under section 80C and medical insurance premium under section 80D. All deductions under section 80 of chapter VI A are permitted. This scheme is relevant to just an Indian occupant assessee who is an Individual, Hindu Undivided Family (HUF) or Partnership Firm.

In case any inhabitant assessee has chosen to file Income Tax Return under the Presumptive Scheme in any budgetary year, in the following financial year, they may quit presumptive scheme and file Income Tax Return as an ordinary assessee. Anyway, for this situation, they at that point cannot profit the advantages of the presumptive scheme for the following five budgetary years. For instance:

In case the occupant assessee decides to file Income Tax Return under the presumptive scheme for the financial year 2016-2017 and 2017-2018, and in the next monetary year 2018-2019, the assessee quits the presumptive scheme and files Income Tax Return under presumptive scheme then he/she cannot file his/her return under presumptive scheme for the following five budgetary years that is 2019-2020 to 2023-2024.


If there should be an occurrence of Firm and Limited Liability Partnership

• 30% (Including Cess) for taxable revenue up to Rs. 1 Crore
• The measure of personal expense and the material additional charge will be additionally expanded by medical and educational cess determined at the rate of 4% of such annual assessment and extra charge
• 12% surcharge for taxable revenue more than Rs. 1 crore.

In case of Companies

• For the evaluation year 2019-20, a local organisation is assessable at 30%. On the other hand, the expense rate would be 25% if turnover or gross receipt of the organisation does not surpass Rs. 250 crore in the year 2016-17.
• The amount of personal duty and the appropriate additional charge will be additionally expanded by wellbeing and instruction cess determined at the rate of 4% of such annual assessment and extra charge
• 7% surcharge for taxable income more than Rs. 1 crore.
• 12% surcharge for assessable income more than Rs. 10 crores.

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