Which ITR to choose for Commission Agents: ITR 3 or ITR 4?

Commission Agents are Businessman or Professionals? What do you think? If you think that Commission Agents are Professionals, then you are wrong. Many people thought that Commission Agents are Professionals.

But this is not right. Actually Commission Agents are Businessman according to Income Tax Act. So, 'Income from Commission' it falls under 'Income from Business' in the computation of tax. So, the code: '09005 - General commission agents,commodity brokers and auctioneers' is a code of business.

Q. Who are Commission Agents?

A. A person who transacts business on commission, work as middleman between Vendors and Buyers, are called commission agents. Now the question is -

Q. What is the correct ITR for Commission Agents? ITR 3 or ITR 4?

A. The correct ITR for commission agents is ITR 3. ITR 4 is not applicable for Commission Agents.

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Q. What happen If any commission Agent files ITR 4 (previously ITR 4S) ?

A. Your return will be treated as Defective Return.

Q. Why ITR 4 is not applicable for Commission Agents?

A. In ITR 4, Net Income is computed u/s 44AD. But Commission Agents are not eligible for sec. 44AD (Presumptive Income Scheme)

Q. Is Balance Sheet and Profit & Loss A/c required for Commission Agents?

A. As you need to file ITR 3, Balance sheet and Profit & Loss A/c must needed. CPC (Centralised Processing Centre) will not process your ITR 3 without Balance sheet and Profit & Loss a/c.

Q. I have submitted ITR 4 in previous year and CPC processed it? Which ITR I will choose this year?

A. Rules of Income Tax Department are changing with time. Systems are also changing, CPC are checking submitted ITRs with more scrutinized manner. So, If you made any mistakes in ITR in nowdays, you may prepare for receive notice from CPC.

Q. What will CPC do, if anyone made any mistake in ITR?

A. Your submitted ITR will not be processed, if CPC finds any mistake in ITR. But don't worry, CPC will send you notice via email and post and they will indicate the error. Also CPC will provide probable resolution in the same notice.

Q. Will the ITR processed after giving response to the notice?

A. If you correct your mistake and give response against notice, then your ITR will be processed by CPC. Otherwise CPC will send you another notice indicating your mistake.

Q. 'I am a Commission Agent and I have computed my income u/s 44AD in several previous years, even CPC processed my ITR in those years. But this year CPC given me a notice telling that I am not eligible for sec. 44AD. What can I do now?'

A. As you are a Commission agent, your income falls under Business Income, but you are not eligible for sec. 44AD. So, you need to file ITR 3 with Balance Sheet and Profit & Loss A/c.

These are some important points to file ITR for Commission Agents. Also put your TDS details correctly in ITR for smooth processing of ITR.