TaxAffects some

Freelancers and small businesses: ITR-3 and ITR-4 are due 31 August

The non-audit deadline for self-employed professionals and anyone on the presumptive scheme is 31 August. After that it is a belated return with a fee.

Krish Dalal

What this means for you

If any part of your income this year came from freelancing, consulting, or your own small business, and nobody is auditing your accounts, your deadline is 31 August, not later. Filing after it costs 1,000 or 5,000 rupees depending on your income, plus 1 percent a month on unpaid tax, and you lose the right to carry losses forward.

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If you file ITR-3 or ITR-4 and your accounts do not require an audit, 31 August is your date. That covers freelancers and consultants, small business owners, and anyone using the presumptive taxation scheme under Section 44AD or 44ADA.

The presumptive scheme is the one most people in this group are on without thinking about it. Under 44ADA a professional declares 50 percent of gross receipts as profit and pays tax on that, with no books to maintain. Under 44AD a small business declares 8 percent, or 6 percent where receipts came digitally. It is simpler, and it is also why the deadline sneaks up: there is no accountant chasing you.

Miss it and the return becomes belated. The late fee is 1,000 rupees if your total income is under 5 lakh and 5,000 rupees above that, plus 1 percent a month under Section 234A on any unpaid tax. The bigger cost is quieter: a belated return cannot carry forward business or capital losses to set against future years, and that can be worth far more than the fee.

Filing takes an afternoon if your bank statements are in order. It takes considerably longer in November when you are reconstructing the year from memory.

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