Which Returns Should Professionals and Freelancers File? How Can I Save time by filing presumptive ITR (ITR 4S)?
Which returns should professionals and freelancers file?
First of all, who are freelancers? Freelancers are self-employed individuals who don’t remain stuck to one employer. They keep on doing work for different individual or organizations. They switch very soon and find new employers very soon. They work for one organization for a contract or short period of time.
"If a person works through the year on regular basis as a freelancer, along with a job, he/she would be called a professional".
After the budget of 2016, being a freelancer or a professional has become easier. There was a relief for people earning less than 50 lakhs per annum. They have come under the ambit of presumptive tax. Earlier, this benefit was available to only HUFs, individual businesses and partnership firms with less than Rs 1 crore turnover under the section 44D of the Income Tax act.
The professionals and freelancers must file presumptive income tax returns, since it has become easy and beneficial for people like these. Since the freelancers and professionals don’t have too many business expenses, this kind of tax payment is a boon for them. This can be hassle free. There is a 30-page form that needs to be filled which contains the information of business and also the good related information like cess, tax, freight, cost of goods etc.
What is a presumptive scheme?
The income, in presumptive basis, is calculated on the basis of assumption rather than actual basis. This has come into force as per the new section 4ADA. There is a need to maintain the records of the expenses. The record must be properly maintained. The person filing presumptive income tax return must remain consistent for the next 5 years, otherwise s/he will not be able to obtain the benefits from the scheme. He will be deprived of the benefits from these. If he fails to do so, he cannot derive the benefits for the next 5 years.
Freelancers and professionals should opt for presumptive income tax for it is easy and has several benefits.
How can I save time by filing presumptive ITR (ITR 4S)?
Presumptive Income Tax Return come with numerous benefits like reducing tax liability, saving time etc. The section 44AD has eased the way you file your presumptive income tax returns. It helps you escape from scrutiny and demands. This helps in giving relief to small tax payers.
It helps you save time in various ways:
1. You need not fill a long form since it has been replaced by a shorter form for the one filing presumptive tax.
2. You need not maintain the books of accounts.
3. You need not get your books audited.
Unlike other professionals who need to pay advance tax, those under Presumptive Tax Scheme (PTS) don’t need to pay advance tax which means that they need not estimate their income 4 times a year which is of help as well. The filling of form 4S is easier than filling the form 4.
Another benefit of filing tax through Presumptive Tax Scheme is that there is a minimum rate of estimation of income. Hence the actual rate of profit needs not be calculated and the minimum of 8% can be used as profit rate. Thus total revenue will help to calculate presumptive profit. There is no need to go into actual calculations which saves time as well. However, if you think that you earn much more than the 8% of total revenue, then you can easily increase the rate for yourself. The government will be happy to accept the additional tax you pay on the income.
Now freelancers and other professionals can file their ITR through LegalRaasta for hassle free experience. LegalRaasta will extend you all the help you need easily at a charge of a very nominal fee which will be less than others. You will have a wonderful experience that will make you come back to us over and over again. The service we provide is of top quality.