Here’s how self-employed individual can file tax return with ITR4

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Income Tax Return (ITR) filing deadline is coming close with each passing week. Though many of the taxpayers are still waiting for the end moment, it is always advisable to start filing early.

For salaried class people, the ITR filing process becomes simpler as some companies do provide help in filing returns to their employees. But, this is not the case for self-employed people.

ITR process is more complicated for the self-employed as there are a lot of aspects that get taken care of for the salaried, but the self-employed have to work on themselves.


So, what should self-employed individual keep in mind while filing ITR?

Foremost, self-employed person needs to understand the tax treatment. From a tax perspective, self-employed individual’s income is Profit & Gains of Business & Profession.
They have to pay taxes on the combined income earned in a financial year from the different clients they have. All earnings, no matter how small, should be added to gross income for the year.

Moreover, the second important aspect is which ITR to file?

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For self-employed individuals, the correct ITR form is ITR-4. They should also be aware of Section 194J of the Income Tax Act that mandates deduction of TDS from payments made to professionals.

ITR 4 is the form used by the individuals and Hindu Undivided Family having income from proprietary business or profession to declare their Income Tax Return.

“The ITR-4 Form is the Income Tax Return form for those taxpayers who have opted for the presumptive income scheme as per Section 44AD ,Sec 44ADA and Section 44AE of the Income Tax Act. However, if the turnover of the business mentioned above exceeds Rs 2 crores, the tax payer will have to file ITR-3,” ClearTax explained.
Further, while filing ITR, self-employed must remember that whenever they receive a payment from a client, they will receive it after tax deducted at source (TDS) is deducted on it.

TDS is usually deducted at the rate of 10% on the payments made to the self-employed person. But the good news here is that, just like salaried individuals, even they can claim a refund on the TDS that is deducted after e-filing tax returns.

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Since the income is treated based on the profit and loss of business, a self-employed individual can claim certain expenses that have incurred towards getting this business.

“You can use these expenses to reduce your income and tax on it. These expenses include rent for office space, meal and entertainment expenses for client meetings, depreciation of computer and other equipment, traveling costs, etc,” ClearTax explained.

How to file ITR4 electronically?

By furnishing the return electronically under digital signature
By transmitting the data electronically and then submitting the verification of the return in Return Form ITR-V
If you submit your ITR-4 Form electronically under digital signature, the acknowledgment will be sent to your registered email id. You can also choose to download it manually from the income tax website. You are then required to sign it and send it to the Income Tax Department’s CPC office in Bangalore within 120 days of e-filing.