In this hour Long video , we go about seeing on how to file ITR 4 for a applicant Jatin from scratch and doing it realtime .Jatin wrote to me that he derived income partly from consultancy fees for one quarter and then for the remaining part of the year derived income from salary .
Since jatin offered consulting services for some period , it is considered to be a profession (so Return Type ITR 4 is applicable ) ,consulting income is not to be treated as salary income and consulting employer is considered for tax purposes like a deductor .(Think of a bank (deductor)who deducts TDS on FD interest income ),.that's why it is not salary , and so on any investment other than salary ,deductor deducts 10 % tax .....
Note in ITR returns , any parent form contains all the schedules of the primary version ,so ITR 2 has all schedules of ITR 1 , ITR 4 has all schedules of ITR 1,2,3 ...what this implies is that ITR 4 will contain schedules of salary as well as contain schedule for professional income ,so jatin needs to fill both ,
Also ,inside ITR 4 there are many other schedule's like schedule HP ,schedule CGOS(capital gain other sources ),schedule DPM(depreciation on plant and machinery )etc ,schedule which the applicant(Jatin) may not need and so has a option to customise the ITR return ....
In this case since Jatin's gross receipts from his non specified profession doesn't exceed 1.5000 Rs in 3 years preceding 2012 13 , he is not liable to keep books of account as section 44AA nor is he liable to get mandatorily audied under section 44AB because his gross income doesnt exceed 10 lakhs from the profession ..so many schedules become optional which can be removed while customising the ITR 4 ,
So for jatini remove the schedules for income pertaining to capital gains , House property and all option schedules under 44AA and 44AB because he is not liable for book keeping ,
Next is to fill relevant schedule's ,after having filled in applicant details and return filing details(before due date under section 139(1), he goes ahead to populate income schedules of salary and business profession besides schedule TDS which comprises of TDS on salary (Schedule 1 ) and TDS on non salary (TDS schedule 2 ) .He also needs to fill Chapter VIA deductions , in case he has benefitted of any head under section 80
Then, all this figures get populated in income sheet where jatin can now calculate tax liability .
In few steps ,
(1) For salary component, schedule salary inside ITR 4 ,SAY 200 Rs
(2) For profession component , schedule profit and loss (Gross receipts /profits)which populates INCOME FROM BP PROFESSION inside ITR 4 say 300 Rs ...
(3) Fill Applicable other schedules
(4) Fill TDS sheets to show tax deducted
(5) Check income sheet and calculate tax liability ,say 40 Rs
(6)Check taxes paid ,i.e whether TDS deducted from salary and non salary equals 40
3 cases arrive here
(1) If more tax has been deducted say 60 Rs then generate XML and upload return for refund '
(2)If less tax has been deducted , say 20 Rs , then pay balance 20 Rs and make tax liability nil before generating XML return
(3) if correct tax i.e 40 rs has been deducted , then generate XML and upload return
In short ,once Jatin's total income from profession is added to the gross income ...say 400 Rs , then tax as per tax slabs would be calculated over this total amount after necessary deductions under Chapter VI A (if applicant has availed any )
The tax slabs are 0-2 lakhs - Nl tax , 2-5 lakhs - 10 % tax , 5-10 lakhs - 20 % tax , above 10 lakhs - 30 % tax ..There is a misconception floating that professionals have to pay 10 % tax .10 % Tax is deducted at TDS for professionsals but even they after declaring total income have to pay tax as per tax slabs .The only advantage they have is they can show expenses and bring down their tax liability which salaried employees can't do because in our case TDS (at source ) happens ....
Summarising, jatin has to check income sheet after filling in all schedules ,i.e in his case salary , schedule BP, schedule 80 etc and click on compute tax for the sheet to automatically calculate tax ....he needs to then check the taxes paid part of the same sheet to see whether he is due for refund or whether he has to pay tax ,
In case he is due for refund, he can generate XML (extended mark up document ) of the filled ITR 4 return )right now and upload the return ,however if tax liability is there , then he needs to pay the extra income tax using Challan 280 , so that sum total of taxes paid and TDS deducted equal tax liability and he can then generate XML and upload return online ,
Once done , the upload return successful message arrives ,
Jatin can now download the acknowledgement and sendacross signed copy to the IT department at bangalore to complete his filing process ,
Hope the first tutorial of it's kind in filing ITR 4 return will definitedly benefit audience ,