INCOME TAX (ITR)

NOTICE FROM INCOME TAX

You may be surprised to receive an intimation/notice from the income tax department even if you have filed your income tax returns within the due date. You would not be sure about what it is and how to respond to it. Don’t worry, we will break it down for you to help you understand your notices in detail.

First and foremost, it is important that you understand the difference between an intimation and a notice. There is a very thin line of difference between the two. Intimation is to highlight the outcome of the processing of your return or conclusion of assessment, and you may not be required to act upon it (although there are a few exceptions to it).

However, when you receive a notice, it requires you to act on it. Recently, the Central Board of Direct Taxes (CBDT) has notified a new scheme known as Centralized Communication Scheme (CCS). The scheme states that, gradually, all communications will happen in an electronic mode.

Every communication by the Income Tax Department (ITD) on or after 1st October shall bear a unique Document Identification Number (DIN).

ITR Form – VII

It is a moral duty of every organization and taxpayer to file an income tax return and pay the taxes. The budget 2020 income tax amendments have stated that the ITR is important to be filed in case the electricity bill is more than 1 lakh and more than 2 lakh for foreign travel expense.

The income tax return form 7 is to be filed by all the Charitable /Religious trust u/s 139 (4A), Political party u/s 139 (4B), Scientific research institutions u/s 139 (4C), University or Colleges or Institutions or Khadi and Village industries u/s 139 (4D). These organizations have to file the form for claiming the exemptions

ITR Form -III

ITR 3 Form is applicable for the individuals and Hindu Undivided Families that earn profit and gains from business or profession.

ITR 3 For is to be filed by the individuals and the HUFs who earn income from carrying a profession or from a proprietary business. ITR 3 Form can be used when the income of the assessee falls in the categories that are mentioned below:

ITR Form IV

ITR-4 Form is the Income Tax Return form for the taxpayers who opt for a presumptive income scheme under Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act.

However, if the turnover of the business mentioned above exceeds Rs 2 crores, the taxpayer will have to file ITR-3.

Who is required to file ITR-4?

ITR 4 is to be filed by the individuals/HUF/ Partnership firm whose total income of AY 2020-21 includes as below:

• Business income under section 44AD or 44AE
• Income from profession calculated under section 44ADA
• Salary/pension having income up to Rs 50 lakh
• Income from One House Property having income up to Rs 50 lakh (excluding the brought forward loss or loss to be carried forward cases under this head)
• Income from Other Sources having income up to Rs 50 lakh (Excluding winning from lottery and income from horse races).

Professional Tax Registration

Professional tax is a state level tax which is imposed on income earned by way of profession, trade, calling or employment. The tax is based on slabs depending upon income of individual who may be self employed or working as employee of an entity. At present the maximum tax that can be imposed is restricted to is Rs. 2500/-.

Professional tax is just like Income Tax except for the fact that Income Tax is collected by the Central Government and Professional Tax is collected by the State Government. When this tax was first introduced in India, the maximum limit on the tax to be collected was Rs. 250.