Income Tax: Use ITR4 for business income offered to tax on presumptive basis, else file ITR3

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Updated: July 24, 2018 10:30:42 AM

Taxability of income as business income or other income depends upon regularity of transaction, volume of transactions and time and efforts devoted based on various judicial precedents.

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I have salary income and a small income from professional fees. TDS is deducted every month from both the income. On the professional income, TDS is deducted under the head 194J. Should I file ITR1 or ITR4?
—Ashok Rana
Taxability of income as business income or other income depends upon regularity of transaction, volume of transactions and time and efforts devoted based on various judicial precedents. In your case, it seems that the professional fees is due to continuous efforts as you are receiving this on a monthly basis and could be treated as business /profession income. ITR-4 is for the purpose of reporting business/professional income where the income is offered to tax on presumptive basis. Only certain notified professionals like doctors, lawyers, chartered accountants, interior decorator, technical consultants can avail presumptive scheme. If you fall in any such categories, you can use this form. Otherwise, you need to file your return in ITR-3 which is for reporting business/profession income other than presumptive basis.

I have consultancy income apart from salary income. Which ITR should I file?
—A S Venugopal
You can report consultancy income as other income if the transaction is one-off. If the transactions are regular in nature, it could be treated as business/ profession income and you need to report this as business income in ITR-4 where the income is offered to tax on presumptive basis and report salary income as well in Part-B in Item B2. Otherwise, you need to report it in ITR-3.

We have taken a flat for Rs 2.80 crore in the name of three persons A, B & C. Rs 2 crore have been paid by A, B and C and the balance funded as home loan from a bank. The share in the property is: A – 50% (Rs 1 crore); B – 30% (Rs 60 lakh) and C – 20% (Rs 40 lakh). B, a senior citizen has paid her own contribution. Can B pay proportionate share of home loan EMI and claim tax deduction?
—Arvind Saxena
Whether B is entitled to pay the proportionate share of home loan EMI or not is dependent on two conditions, i.e., whether she is a co-owner of the house and also a co-borrower of the loan. If both the conditions are met then she is entitled to claim tax deduction of interest and principal paid on home loan repayment of her share of loan.

The writer is partner, Ashok Maheshwary & Associates LLP. Send your queries to fepersonal finance@expressindia.com

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