ITR for Self-employed Individuals: Explained

Ready for tax season, or still feeling a bit confused? Don’t worry, we’re here to make things clearer with this video.

 

First, we'll discuss ITR-3. This can be the ideal form for anyone running a proprietary business or profession. If you’re running a ‘one-man-show’ —like a doctor, lawyer, or consultant—this form is for you. It includes your total income from your practice.

Next, you'll understand all about ITR-4 and the presumptive taxation scheme. With this scheme, your income is calculated as a set percentage of your turnover under Sections 44AD, 44ADA, or 44AE. We’ll also look at finer details under each. For instance, Section 44AD applies to business owners with a turnover up to ₹2 Crores, Section 44ADA to professionals earning up to ₹50 Lakhs. Similarly, Section 44AE applies to those working with goods carriages who own up to ten vehicles.

Finally, the video explores other forms like Form 16A, Form 26AS, Annual Information Statement, and Form 3CB-CD. You’ll also learn about Forms 15G and 15H, which are needed to avoid TDS deductions on your interest income.

Filing ITR may initially seem tough for self-employed individuals. However, with the right forms and a little preparation, you’ll soon become a pro at filing your taxes!

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Key Takeaways

ITR-2 is for individuals and Hindu Undivided Families (HUFs) with income from sources like capital gains and house property

ITR-3 is for individuals running a proprietary business or profession, capturing all business income and expenses

ITR-4 is for individuals who have opted for the presumptive taxation scheme under Section 44AD, 44ADA, or 44AE

ITR-5 is for firms like Limited Liability Partnership (LLP), Body of Individuals (BOI), and Association of Persons (AOP)

ITR-6 is for companies, barring those claiming exemption under section 11

ITR-7 is for individuals required to furnish a return under sections 139(4A) to 139(4F)

Keep all necessary documents handy, including PAN card, Aadhaar card, bank account details, and Form 16/16A/16B

Double-check calculations to ensure accuracy and claim all eligible deductions and exemptions when filing your ITR online

Frequently Asked Questions
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The deadline for filing your Income Tax Return (ITR) is usually July 31st of the assessment year. For example, for your ITR of FY2023-24, you usually must file by July 31st, 2024. However, this date might be extended by the government on certain occasions. So, it's important to stay updated on any announcements regarding ITR filing extensions. This could help you avoid late fees or penalties.
The presumptive taxation scheme allows you to calculate your net income as a fixed percentage of your annual turnover. This could simplify your tax compliance, especially for small businesses and self-employed individuals. It eliminates the need for detailed bookkeeping and audits, which could make tax filing easier and less burdensome.
ITR-2 is specifically designed for those who have income from sources such as capital gains, house property, or other non-business income. This applies to you if you're filing as an individual or as part of a Hindu Undivided Family (HUF). If you fall into this category, using ITR-2 could help ensure that you report your income accurately and comply with tax regulations.
ITR-3 is meant for individuals who run a proprietary business or profession. This form captures all your business income and expenses, allowing you to report your earnings comprehensively. It could give you a complete picture of your business taxation. If you are self-employed or operate a business, ITR-3 can be the appropriate choice for your tax filing.
Self-employed individuals and small business owners should file ITR-4 if they opt for presumptive taxation. This is applicable under Sections 44AD, 44ADA, or 44AE. This form simplifies the tax process by allowing you to declare income based on a presumed rate. This means that you might not have to maintain detailed accounts. This could be ideal for you if you have a straightforward financial situation.
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