Income from business

For income from proprietary business, ITR 4 is applicable. However, if you are a partner of a firm and not carrying out any business under any proprietorship, you need to file ITR 3.

Documents needed

• Balance sheet and profit and loss account: For ITR 3, you need to have a balance sheet and profit and loss account of your proprietary business handy. You need to have the details of your partnership-sharing ratio, your share in profits, etc. Secondly, if you had incurred losses in any of the last years and want to claim set-off, you can do so and also carry forward the balance losses, if any remain, in accordance with provisions of the I-T Act. For this, you need the past year’s tax return in order to provide the details.

• Tax audit report: If the business income is more than Rs40 lakh (Rs10 lakh in the case of specified professionals), you need to get the tax audit done before the deadline of 31 October. Further, keep the tax audit report ready as the details are required to be furnished in the return form. For business income less than Rs40 lakh (Rs10 lakh in case of specified professionals) the deadline is 31 July.

• Transfer pricing certificate: In case you have undertaken any international transactions to which transfer pricing provisions apply, you’ll need to file the transfer pricing certificate to be obtained from your CA. Such a certificate is to be obtained and filed before the due date of filing the return. Transfer pricing is the process of adjusting the prices of cross-border transactions between related or associated parties.

• Form 16A: If you are a consultant or a professional, and the payer of income has been deducted tax at source, you should receive Form 16A form the payer and keep it ready as the particulars are required to be furnished in the return form.

• Tax challans: Where the net tax due for the whole financial year is more than Rs5,000 (after considering the tax deducted at source), you are required to pay the taxes through advance tax mechanism. Up to 30% of net tax due is payable by 15 September of the assessment year (2006 in this case), up to 60% till 15 December (2006) and up to 100% till 15 March (2007). Where no such taxes have been paid or paid in part, the rest can be paid before filing the tax return as self-assessment tax. But you need to pay the tax before filing your return. Challans proving payment of taxes need to be kept ready, as the details have to be filled in the return form.

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