Applicability of itr 4 on doctors

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kusum khurana (Querist)
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22 July 2016 Hi everyone

My friend is a doctor. He is receiving salary (he consider it as salary) from a hospital which is run by trust.Yesterday he consult me for ITR as he received form 16A. As i understood he is getting professional fees because his Tax is deducted by hospital under section 194j. But he has not maintained books of accounts although his receipts are above 150000. when he consult hospital, they said that it is like salary you should file ITR1 and claim deduction under sec 80c. But i don't agree as in my opinion tax is deducted under sec 194j so it is not salary it is professional fees so he should file ITR 4. My query is can he file ITR 1 or my opinion is right? IF he file ITR 4 then what about balance sheet as he is not practicing independently but working under trust?please anyone will suggest.

Thanks
Kusum

kusum khurana

kusum khurana (Querist)
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06 August 2016 please anyone will answer my query on itr4

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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14 July 2024 Based on the information provided about your friend's situation as a doctor receiving payments from a hospital run by a trust, let's clarify the appropriate approach for filing income tax returns (ITR) in India:

### Nature of Income

1. **Income Classification**: The nature of income received by your friend is crucial in determining the correct ITR form to be filed:
- If the income received is considered professional fees and tax is deducted under Section 194J (which pertains to fees for professional or technical services), it typically indicates that the income is not salary but rather income from a profession.
- Salary income is typically covered under Section 192 for TDS purposes, and it is reported in Form 16, not Form 16A (which is for TDS on income other than salary).

2. **Form to File**: Based on the nature of income as professional fees (under Section 194J), your friend should file **ITR 3** (Form for individuals and HUFs having income from a profession or business).

### ITR Form Selection

- **ITR 1 (Sahaj)**: This form is for individuals having income from salaries, one house property, other sources (interest etc.), and having total income up to Rs. 50 lakh.

- **ITR 3**: This form is for individuals and HUFs having income from a profession or business. It requires the preparation of a balance sheet and statement of profit and loss (P&L) if the total income exceeds Rs. 50 lakh or if the individual is claiming certain deductions.

### Specific Considerations

- **Deductions**: Your friend can claim deductions under various sections such as 80C (for investments), 80D (for medical insurance premiums), etc., regardless of whether they file ITR 1 or ITR 3. The eligibility to claim deductions does not depend on the ITR form but on the nature of the investments and expenses incurred.

- **Balance Sheet**: If your friend's income exceeds Rs. 50 lakh or if certain deductions require the preparation of a balance sheet (like claiming depreciation), they would need to prepare a balance sheet and P&L statement as part of filing ITR 3.

### Conclusion

Given that tax has been deducted under Section 194J, indicating payment for professional services, your friend should file **ITR 3** to accurately reflect their income as professional fees. This ensures compliance with income tax regulations and accurately reflects the nature of income received from the hospital.

It's advisable for your friend to consult with a tax advisor or a Chartered Accountant who can provide personalized advice based on their specific income details and ensure correct filing of the income tax return.

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