Understanding ITR Filing for Salaried Individuals with Concurrent Small Business Activity

For individuals who are salaried employees and concurrently run a small business, determining the correct Income Tax Return (ITR) to file can be a nuanced process. Depending on the income generated from the small business, and whether accounts have been maintained, the appropriate ITR form must be chosen. This article provides a detailed explanation to guide you through the correct filing process.

The Right ITR Form for You

When you are a salaried individual with a small business, the ITR forms you might use are ITR-3 and ITR-4. The choice of form depends on whether you are operating under the presumptive taxation scheme or providing a detailed breakdown of your income and expenses.

ITR-4 - For No Maintained Account Books

ITR-4 is specifically designed for individuals running a small business without maintaining account books. If your business income is 8 lakhs or more annually and you do not maintain any account books, you should file ITR-4. This form is simpler and allows you to declare the income based on a presumptive tax scheme.

ITR-3 - For Accounts Maintained

For individuals who maintain proper books of account and have prepared a balance sheet, ITR-3 is the appropriate form. This form requires a detailed accounting of all income, expenses, and other financial details. ITR-3 is more comprehensive and detailed, making it suitable for those who have a robust record-keeping system in place.

Choosing the Form: Presumptive vs. Detailed Filings

Deciding between ITR-3 and ITR-4 depends on how your business is being run and the tax implications. Here are some points to consider:

ITR-4: Use this form if you do not maintain any account books and your business income is 8 lakhs or more per year. ITR-3: Use this form if you maintain proper account books, have a balance sheet, and wish to provide a detailed accounting of your income and expenses.

Proper Record-Keeping and Reporting

No matter which form you choose, it is crucial that you maintain accurate records and report them properly in your ITR. This includes:

Properly recording any tax deducted at source (TDS). Preparing detailed financial statements. Ensuring all income is captured accurately.

Further Assistance and Guidance

If you are unsure about which form to use or need further guidance, consider consulting a tax professional. They can provide personalized advice and ensure that your tax filings are accurate and complete.

Aditya, Sujit Bangar, and Aditi Bangar are experienced professionals who can offer valuable insights and assistance. They can help you navigate the complexities of tax filings and ensure that you comply with all tax regulations.

The Bottom Line

Choosing the right ITR form is critical for salaried individuals with concurrent small business activity. By understanding the differences between ITR-3 and ITR-4, you can ensure that your tax filings are accurate and compliant. Proper record-keeping and consultation with tax experts can further aid in this process.