If you are a salaried individual, you know you have to file ITR 1 or ITR 2, depending on your income and property. In case you have a business, you have to file ITR 3, ITR 4 or ITR 4S. But, if you have just quit your job and started working on a prototype for your startup, which income tax return form is right for you?
If you are confused whether you should collect your Form 16 from your ex-employer and declare your salary or you should file ITR 4, start by downloading the correct form, depending on how you are running the startup. Even if you haven’t registered your startup or raised capital to run the same, it is advisable that you file ITR 4, meant for professionals and business.
This is important as you can register and keep a record of your initial capital investments with tax department. This will also be applicable in cases where a prototype is ready but does not generate revenue. There are people who tend to make mistake of showing their lack of revenue as loss in their return form, when it should be capitalized in balance sheet of ITR 4.
However, if your business is making profits, you can file ITR 4S, which is much simpler, given that your business’ gross receipts are not more than Rs. 1 Crore. Also, your business should not be registered as a company.
Our Director, Mr. Vaibhav Sankla, says that in case you are using your savings, from your income or any other source, to build a business asset or settle expenses, it will be reflected in your income statement of your ITR 4.
Source : Economic Times