Sole Proprietorship Income Tax


I’m planning on setting up web design agency as a sole proprietorship in Bangalore. I’m expecting an annual turnover of approx 30 Lakhs. I want to know if I can apply for the ITR-4 or ITR-4S taxing policies.
Also, would there be any difference in taxation if my client is based overseas??

Thank you


Income Tax Return (ITR) or ITR-4 is usually filed by anyone who is running a business or if they belong to a profession. There is no minimum income required for an individual to file their return using this form. ITR 4 is used by many individuals including those who are shopkeepers, doctors, construction contractors, freelance teachers, wholesalers, insurance agents and interior decorators. The difference between ITR4 and ITR 4S is the way income is calculated for a business.

When you are running a small business, maintaining accounts and estimating your profits and losses might be time-consuming and difficult. You might find it tough to estimate your income and how much taxes you might have to pay. In order to ease your difficulties, the Income Tax Department has laid out provisions using which you can estimate your income based on your receipts. This is known as calculating income on a ‘presumptive basis’. So, ITR 4S is for such businesses. Using this method, you income will be 8% of your gross receipts. However, you will not be allowed to deduct any business expenses against the income. Section 44AD lists the businesses that are not eligible for calculating income using this method.

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BB Expert