• Using 4S for freelancer income + ST/LT CG

Hi,
 The incomes  ( combined less than  20 lak ) I have are 
    ->  Freelancer Consultant
    ->  STCG - Equity
    ->  STCG - Debt
    ->  LTCG  - Equity
    ->  House Rent
    -> FD  & Savings a/c interest

As I understand, in order to use STCG-Equity @ 15% Tax, I'll have to use Form 4.
I'm thinking of treating STCG Equity as biz income (  @ slab rate ), so that I can use 4S .
 Is this allowed by IT ?

I'm thinking of using 4S As:
      -> Business Income : 50% of sum of Consultancy +  STCG(Equity) + STCG(Debt)  
      -> Not declaring LTCG - Equity
      -> Declaring House Rent Income appropriately
       -> Declaring Interest on FD and savings as other

Will this be correct thing to do ?
Should  add 'STCG  equity and debt'  to Other income instead ? ( i.e. show 100% instead of 50% )

Thanks;
Asked 7 years ago in Income Tax

Dear Sir,

Short term equity can't be shown as business income. It has to be shown as capital gain income.

It is must to declare long term gain on equity.

You need to file form 4 only since whenever exempt income is more than Rs. 5,000/- you can not file form 4S. In your case you have LTCG which is exempt income so you can't file form 4S otherwise also.

Vishrut Rajesh Shah
CA, Ahmedabad
928 Answers
38 Consultations

5.0 on 5.0

STCG can not be treated as Business income unless your main activity is trading in shares. If you are showing it as business income then you have treat the shares as stock and not as investment. And for Shares business income you can't take 4S.

In my opinion you are planning to file the return in incorrect manner. I hope this presumptive taxation is for the income for the year ending 31st March 2017.

Vidya Jain
CA, Kolkata
1008 Answers
58 Consultations

4.8 on 5.0

Dear Sir,

Let me tell you that not reporting LTCG is grossly incorrect.

Further, reporting STCG in ITR 4S depends upon the various factors I.e. materiality, frequency nature etc.

So accordingly, I would recommend you to file itr4 instaed of ITR 4S

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Sir it is must to understand that section will not allow you straight away exemption. If your profit is more than 50% you have to pay tax on such higher profit.

So even if you declare 50% profit it will still create a problem at scrutiny because the section speaks about minimum. Profile to be disclosed is 50% maximum it can be any profit actually earned.

Vishrut Rajesh Shah
CA, Ahmedabad
928 Answers
38 Consultations

5.0 on 5.0

yaa you can declare

Vidya Jain
CA, Kolkata
1008 Answers
58 Consultations

4.8 on 5.0

Hi,

In ITR-4S, you cannot show Capital Gains.

However, you can show income from all Sources including Presumptive Taxation (Section 44AD/44ADA) in ITR-4. So, kindly use ITR-4

Pradeep Bhat
CA, Bengaluru
542 Answers
94 Consultations

5.0 on 5.0

Hi,

You can claim presumptive rate of profit for professional receipts only from AY 2017-18 ie FY 2016-17.

Form 4 doesn't allow you to claim presumptive rate of profit.

With regard to the expenses to be claimed, ensure you have appropriate proofs and documentary evidences.

Regards

Keerthiga Padmanabhan

M.Com., CA, LLB

Keerthiga Padmanabhan
CA, Greater Mumbai
784 Answers
27 Consultations

5.0 on 5.0

Yes, it seems that ITR 4 has been replaced by ITR 3.

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Yes

Vishrut Rajesh Shah
CA, Ahmedabad
928 Answers
38 Consultations

5.0 on 5.0

Hello Sir,

In order to answer your query could you please inform as to which year does your query pertain.

ITR - 3 is for individuals having income from a partnership firm.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

For AY 2017-18, existing ITR-4 has been renumbered as ITR-3 (Existing ITR-2, 2A & 3 are merged into one form).

So, you have to use the new ITR-3 form for AY 2017-18.

Pradeep Bhat
CA, Bengaluru
542 Answers
94 Consultations

5.0 on 5.0

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