Which ITR to be filed by Director and Proprietor?
I hold following positions in two businesses at this moment:
1) Majority shareholder and Director in a Private Limited company.
2) Proprietor of a Proprietorship firm.
Both the businesses are startups and are not profitable at this moment. For now, I do not draw any salaries from any of the two businesses and will not do so for few more years. I have following questions related to ITR filing:
1) Do I continue filing ITR-1 like I used to do it while I was in job.
2) If not, then which is the right ITR to be filed for my case.
3) I have already filed ITR-1 for AY17-18. If a different ITR was to be filed then can I revise now ?
4) As expenditure is lot more than income for both businesses at this moment, so are there any audit requirements ?
Asked 9 months ago in Income Tax from Lucknow, Uttar Pradesh
For proprietorship concern, the return shall be filed under your PAN only. Even if you're not having incomes, you can file loss return and carry forward the losses to adjust to any future income and save taxes thereby.
Use ITR3. You can revise the return if the amount of expenses are substantial and you want to carry forward the same.
For Company Statutory Audit is Mandatory for proprietorship no Audit required
If u had filled your 2017-18 ITR on time the. You have to revise the same and file ITR 3 to carry forward loss of proprietorship firm
This loss is adjustable against future profit thus we can save our tax liability
1 and 2. No, You have to file ITR3.
3. Yes, you can revise it. In fact, you should revise it.
4. Yes, you should get your accounts audited. It will help you to carry forward your losses which will decrease your taxes in future years.
Please feel free to call/ revert in case you need any of the above services.
Thanks and regards
CA CS B.Com
2) You need to file ITR-3 for AY 2017-18 as there is Income from Business
3) Yes. You can revise the return any time before 31-Mar-2018
4) Yes. As per Section 44AD if the turnover is below Rs. 1 Crore and the profit shown is below 8% / 6% as the case may be, then Tax Audit is required.
Please find below details :
- You need to file ITR 4 since have business income / (Loss)
- Sir you can not revise ITR by changing the ITR Form type.
Yes if you do not have any income in excess of 8% of turnover than audit is must
If in AY17-18 you have the proprietorship business then yiu need to file ITR3 or 4. ITR1 is only for salary income.
Kindly clarify for which year you are asking to file
Hi Lakshita/ Lalit/ Abhishek/ Pradeep/ Vishrut/ Vidya,
Thanks to all of you for responding back. As I have understood that I need to file ITR-3 or ITR-4 instead of ITR-1.
1) The private limited concern where I am Director was incorporated in OCT 2015.
2) The proprietorship concern was established in FEB 2017
Now I have some follow-up questions:
1) Can I revise to ITR-3 for AY17-18 and AY16-17 ? Both have currently been filed as ITR-1 on time before due date each year.
2) What is difference between ITR-3 and ITR-4 and how do I know which one is appropriate for me ?
3) There is also a mention about audit in some of the responses. Does this audit apply to ITR-6 filed using company PAN or to ITR-3 or ITR-4 that I will now revise or both ?
4) I have a CA already appointed as auditor for RoC filings of the company. Does this audit for income tax department need to be done separately for the company while filing ITR-6 ?
5) Currently both the company and proprietorship firm make zero revenue. Does the audit on ITR-6 and ITR-3/4 still apply ?
Asked 9 months ago
1 You have to revise ITR of AY 2017-18 only
2 ITR FORM 4 is for presumptive income where income disclosed on presumptive basis i e no books of Accounts prepare and disclose a certain percentage of revenue as income
But in your case where you have loss you have to file ITR FORM 3
3 Audit is only for Company and this is ROC Audit only not income tax audit and no Audit require for proprietorship
1)The ITR can be revised only before assessment of return. So, you can go for rectification of return.
2) ITR-3 is for the assessee who are going for presumptive taxation. and ITR4 is for the assessee who has to keep its books of account and are taxed at normal provison.
3) ITR6 is applicable for only companies. However, audit here referred is Tax audit. If you have gross receipt more than 2 crores or if you are declaring lower profit U/S44AD then you are liable to get your books of accounts audited.
4)Company are liable to get statutory audit under companies Act. As you have mentioned earllier, there were no income under company, you are not liable to get tax audit. However, you are liable to file ITR6.
5) ITR6 still apply for companies, because they are liable to get account maintained. and
If you are trading under proprietorship business you can go for 8% and file ITR 3.
Feel free to know if you require further clarifications
a) No you can not revise the same
b) ITR - 3 is for normal business and ITR - 4 is presumptive business which is applicable where you offer at least 8% profit for tax
c) It need to be done separately and its report need to be submitted by chartered accountant online
d) By revenue do you means sales or profit. If there is sales than it is must to go for business returns
1) ITR 3 for AY 2017-18. ITR 4 for AY 2016-17. (From AY 2017-18, ITR 4 was renumbered as ITR 3)
2) ITR 4 is for Presumptive Income. ITR 3 is for Normal Business/Profession Income
3) Company has to get its books Audited under Companies Act and File ITR 6. You as a proprietor have to get your books Audited only if your turnover was above Rs. 1 Crore (For both AY 2016-17 and 2017-18) and file ITR 3/4 as the case may be
4) Audit under Income Tax Act will be required only if the Company's Turnover exceeds Rs. 1 Crore. If tax audit is applicable, the same can be done by any CA. However, it is advisable to get it done from the same CA.
5) Audit not required under Income Tax Act
Hi Lalit/ Vidya/ Vishrut/ Pradeep,
Thanks for staying on course with me. I really appreciate your effort in explaining the terms in more detail.
By revenue I mean that company and proprietorship firm do not make any sales. The company and proprietorship firm have no income.
However there is substantial investment (effort+cash) made for developing the product in both the organisations. As the product is not market ready, we currently offer it on trial basis to selected customers for their feedback. So far we have not charged any of our customers. Depending on customer feedback we make further improvements and then go back to the customers for re-assessment. This cycle will continue for at least one more year until we are confident about market readiness of the product.
Now let me ask the similar questions again:
1) As I understand from responses that ITR can no more be revised after assessment. So I need go for rectification by filing ITR-4 for AY2016-17 and ITR-3 for AY2017-18. Is this the correct procedure ?
2) ITR-6 has been filed for the company in AY2016-17 and AY2017-18 by CA firm appointed for handling company accounts. Does it attract audit in view of zero revenue/sales/income/profit ?
3) While filing ITR-4 for AY2016-17, as I have not drawn any salary from the company but have given unsecured loan to company, do I need to get the personal ITR-4 on my PAN audited ?
4) While filing ITR-3 for AY2017-18, as I have not drawn any salary from the company or proprietorship but have given unsecured loan to both company and proprietorship firm, do I need to get the personal ITR-3 on my PAN audited ? The proprietorship firm has zero revenue/sales/income/profit in AY2017-18.
Asked 8 months ago
1) If you have received Intimation u/s 143(1), that is not completion of assessment. It's a Deemed assessment. Assessment is complete only if an Order u/s 143(3) is issued.
2) No. Audit is not attracted as Turnover is below Rs. 1 Crore
3) Not required in my opinion
4) Not required in my opinion
1) Yes you need to go for rectification. If you want I can assist you.
2) Yes, Under Companies Act, every comany need to get statutory audit irrespective of receipt.
3)For the given transaction, you are not liable to get accounts audited.
1. You can revise your returns for AY 2017-18 and AY 2016-17.
2. As per my opinion, audit is not required until your net income exceeds maximum amount not chargeable to tax.
I assume that the query has been taken care of by other experts on the panel.
Feel free to get back in case you have any part of your query left unanswered.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Rohit R Sharma
BCOM, FCA, LLB, CERT. FAFP
Query is already in process with other experts.
CA, Greater Mumbai