Income Tax Filing for Self-Employed ITR

The individuals who are called as the assesses under the income tax rules 1962 and Income Tax Act 1961, has to pay the income tax as per the government rules. In the name of the Income-tax for the individuals, the government has levied this direct tax.

Any individuals who are earning income in or proprietorship firm owners, HUF which is also said to be Hindu undivided Family, A registered company with the register of companies, a partnership firm, a limited liability partnership firm need to pay the income tax. This assessment will be identified by their PAN numbers. PAN number is the Permanent Account number.

IT for Self-Employed –

The income types of individuals are classified into five heads. These five heads show the ways of income individuals earn from and the computation of their income.

ITR Filing For Self Employed

The incomes of the five heads are-

  • Capital Gains
  • Business or profession profits and gains
  • House property income
  • Salary income
  • Income from the other sources.

Who comes under as the self-employed individuals?

A person who sells their service to the different employees by putting any contract to them is said to be as self-employed. As per the government rules, under the head “gain and profit from profession or business” for self-employed have to pay the income tax as per the Income-tax act, 1961.

According to this act, self-employment is named as the profession. Vocation includes in the profession as per the Act. An author, an auditor, a doctor, an astrologer, an architect, a painter comes under vocation. Commerce, manufacturer, any adventure or concern in the nature of trade, commerce or manufacture, any trade-in this act is said to be Business. Particularly any profession is not defined in this act.

In the regular vocation, profession/ business profits will be computed once deducting the expenses and losses for the earning. Any of the individuals who earned through the profession has to get their account audited by Chartered Accountant. Once checking with the accounts they have to submit the audit report if their receipt if more than 50 lakhs for the FY which is the Financial year.

Tax Filing for Self-Employed-

The individuals have to file Income Tax Return-4 (ITR-4) in the normal tax filing by the self-employed. The income earned from the professions, all have to claim the expenses. With the valid proofs in the records, these expenses can be deductible.

Self-employed Tax-Rates-

As per the other incomes, profit and gain if taxable from the professions. The following are the tax rates for the financial year of 2018-19. These rates are depending on the category of the person.

  • For the income which is above Rs.10,00,000/- – Excess from the amount of Rs.10,00,000/- is 30% of the amount.
  • For the income which is between Rs.5,00,000/- and Rs.10,00,000/- Excess from the amount of Rs.5,00,000/- is 20% of the amount.
  • If the income which is between Rs.2,50,000/- and Rs.5,00,000/- Excess from the amount of Rs.2,50,000/- is 5% of the amount.
  • For the income which is up to Rs.2,50,000/- there will be no tax rates.

Tax rates for senior citizens who are between 60 and 80 years of age.

  • For the income which is above Rs.10,00,000/- – Excess from the amount of Rs.10,00,000/- is 30% of the amount.
  • For the income which is between Rs.5,00,000/- and Rs.10,00,000/- Excess from the amount of Rs.5,00,000/- is 20% of the amount.
  • The income which is between Rs.3,00,000/- and Rs.5,00,000/- Excess from the amount of Rs.3,00,000/- is 5% of the amount.
  • For the income which is up to Rs.3,0,000/- there will be no tax rates.

Tax rates in case of the super senior citizen whose age is 80 years or above.

  • For the income which is above Rs.10,00,000/- – Excess from the amount of Rs.10,00,000/- is 30% of the amount.
  • For the income which is between Rs.5,00,000/- and Rs.10,00,000/- Excess from the amount of Rs.5,00,000/- is 20% of the amount.
  • The income which is up to Rs.5,00,000/- there will be no tax rates.

In the case of companies-

  • If the taxable income is more than Rs.10 Crore, the surcharge is 12%.
  • If the taxable income is more than Rs.1 Crore, the surcharge is 7%.
  • The applicable surcharges may be applicable and the amount of income tax may be increased by education and health cess. This will be calculated at the rate of 4% of such surcharges and income-tax.
  • A domestic company is taxable at 30% in the assessment year of 2019-20. If the gross receipt or turnover of the company does not exceed Rs.250 Crore in the previous year 2016-17 the tax would be 25%.

In the case of the Limited liability partnership and firm-

  • If the taxable income is more than Rs.1 Crore there will be 12% surcharges.
  • The applicable surcharges may be applicable and the amount of income tax may be increased by education and health cess. This will be calculated at the rate of 4% of such surcharges and income-tax.
  • For the taxable income which also includes Cess up to Rs.1 Crore, 30% will be surcharged.