Unlike the salaried, filing ITR is a bit complicated for professionals as they have to maintain elaborate documentation.
The article talks about the various documents (processes involved) required for filing ITR by Professionals. These include compute turnover and expenses, claim depreciation, books of account, TDS, when you need to deduct taxes, borrowed money, when audit is necessary and missed advance tax.
The article suggests that the best way is to start from your bank accounts. For this, you are required to obtain the bank statement for the entire financial year. You should note down the payments received from clients including those received in cash. This will amount to total turnover. Then, calculate expenses incurred for generation of income.
You can claim depreciation of assets only if it is either in your name or in the name of the company. Methods for calculation of depreciation are mentioned in the Income Tax Act.
The IT Act says that every businessperson or professional is required to maintain books of account, where the annual income is more than Rs. 1.2 lakh or the total sales/receipts are
over Rs. 10 lakh in any of the past three years. According to Vaibhav Sankla, Director, H&R Block India, notified professionals like doctors, interior decorators, lawyers, architects, engineers and chartered accountants compulsorily need to maintain books of accounts without any limit of turnover or profits.
He mentions that you can reduce tax to the tune of amount deducted by the client from the payment. In order to avail this tax credit, the client is supposed to have deposited the amount in the government treasury.
The article further discusses about the other above mentioned processes involved in filing ITR-4.
Apart from this, the article also lists down the changes from next financial year.
Source : Business Standard