Income Tax Return e-Filing for AY 2019-20: Filing Income Tax Return is equally essential for all types of taxpayers – including those with salary, business and professional incomes. It’s a fact that it’s easier to compute the tax liability of salaried people who usually get a fixed amount every month from their employer(s) that reflects in their Forms 16. On the other hand, it’s slightly trickier to compute the tax liability of businesspeople, self-employed and those with professional incomes as their income stream may be unpredictable and irregular.

As such, the tax-related complications of salaried and non-salaried taxpayers may vary significantly. Here we have suggested some important points that the non-salaried, self-employed professionals or small businesspersons should keep in mind while filing their ITRs

1. Utilise Presumptive taxation method

If you are a businessperson or someone with professional income and your gross receipt (turnover) doesn’t exceed Rs 2 crore and Rs 50 lakh respectively in the relevant financial year, you can file your ITR under the presumptive taxation scheme. According to this simplified method, eligible taxpayers get the benefit of not keeping the books of account. For business taxpayers, the income is calculated as 6% to 8% of the gross receipt whereas for professionals the income is computed as 50% of the gross receipt.

The taxpayer can voluntarily calculate the income of more than 6%/8% (for those with business income) and 50% (for those with professional income) of their gross receipt. However, if their expenses are more than the limits allowed under the presumptive scheme, they need to maintain the books of account and get their accounts audited under the prescribed rule.

2. Factor in GST

Business and professional taxpayers who are registered under the Goods and Services Tax are required to furnish their GST registration number in the ITR. The Income Tax Department now allows them to provide multiple GST registration numbers in the ITR.

The GST Network and the I-T Department are now enabled to access data from each other’s platforms to verify the correctness of the information provided by the taxpayers. So, before filing the ITR, reconcile the details provided in the GSTN, and if there is a mismatch, recognize the reason for the same. Sometimes taxpayers receive the outstanding payment from the past financial year in the next financial year due to which it results in a difference in the receipt reported, according to Form 26AS and the detail filed in the GST Returns. So, the businessmen or professionals should be prepared to figure out the mismatch (if any).

3. Prefer digital and non-cash transactions

The government is aggressively promoting non-cash payments in the country. Under this mission, the government has allowed the benefit of 2% in computing the net income by reducing the applicable percentage from 8% to 6% under the presumptive scheme for taxpayers with business income who receive payments by digital modes.

Let’s understand this better with the help of an example: If your gross receipt from business is Rs. 1 crore during the relevant financial year, the income that would be considered for the income tax computation would be Rs. 6 lakh (@6%) instead of Rs. 8 lakh (@8%), provided you received the payments through digital mode.

There are many more benefits of adopting digital transactions over cash ones including saving of time, safer transactions and easy access to details of past transactions.

4. Keep important documents handy

While filing the ITR, the non-salaried taxpayers should keep a number of relevant documents handy. Some key documents that you may need at the time of filing the returns include details of GST registration, PAN card, account statements of all the banks, investment-related papers, Form 26AS, etc. You should also keep other documents such as a statement of loan account, documents related to business expenses, etc. You should also be able to clearly distinguish between personal and business expenses to correctly file the ITR.

5. Carry forward loss from business or profession

After setting off a loss under business or profession from intra and inter head, the remaining loss can be transferred for up to 8 consecutive financial years. Such carried-forwarded losses can be adjusted in the future from the income received from business and profession. However, it is important to file the ITR without a break in the following years to carry forward such losses and to adjust them in the future.

Lastly, it will be important to note here that the extended 31 August 2019 deadline to file ITRs without having to pay a penalty is just a few weeks away. However, you’ll be well-advised to file your returns as early as possible to avoid last-minute glitches. While a late filing can result in a penalty, an erroneous filing may invite a notice from the I-T Department. If you’re unsure about anything, don’t hesitate in reaching out to a qualified tax advisor to not just correctly compute your tax liability from your business or professional income but also ensure your ITR gets filed without a mistake.