Hire of bus with transport department

Save Share

This query is : Resolved

Shaik Shair Ali (Querist)

26 December 2012 Dear Sir,
One of my client has given Bus on hire to APSRTC his Gross Receipts for AY 2012-13 Rs.30 lacs and TDS Rs.30,000/- can he file return in ITR-4S by taking income @8% and claim Refund.

Thanks in Advance Sir

CA Neha Chauhan

CA Neha Chauhan (Expert)

26 December 2012 Hello dear,

Your client can file return in ITR 4S if he opts for presumptive taxation. but if his netproft is more than 8% then he has to file in normal ITR 4 , as the ITD comes with Presumptive Taxation with a mind that any trader or person having business can earn at least 8% of the gross receipt otherwise he has to audited his books of accounts according to me.

Regards,
Neha Chauhan

Shaik Shair Ali

Shaik Shair Ali (Querist)

26 December 2012 Is it mandatory to maintain books of accounts if he opt for 8% profit and file ITR 4S

Shaik Shair Ali

Shaik Shair Ali (Querist)

28 March 2013 Is it mandatory to maintain books of accounts if he opt for 8% profit and file ITR 4S

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

28 July 2024 Yes, even if you opt for the presumptive taxation scheme under Section 44AD (where you declare a profit of 8% of turnover) and file ITR-4S, it is still mandatory to maintain books of accounts. Here’s why:

### **1. **Requirement to Maintain Books of Accounts:**

Under the presumptive taxation scheme (Section 44AD), you are allowed to declare a certain percentage of your turnover as income and pay tax on that amount. While the scheme simplifies the tax filing process by allowing a fixed percentage of profit to be declared, the requirement to maintain books of accounts remains:

- **Section 44AA:** The Income Tax Act mandates that a taxpayer engaged in a profession or business maintain books of accounts and documents as prescribed under Section 44AA. This requirement applies to all taxpayers, even if they are under the presumptive taxation scheme.

- **Section 44AD:** Although you are not required to maintain detailed accounts of expenses and receipts to prove the actual profit, the books of accounts still need to be maintained to substantiate the turnover and other details required in the income tax return.

### **2. **Maintaining Books for Future Reference:**

- **Verification:** The books of accounts serve as evidence in case the tax authorities require verification or audit. Even under Section 44AD, if the tax authorities decide to scrutinize your return, having proper books and records will help in defending your claim and avoiding any penalties or issues.

- **Compliance:** Maintaining books ensures that you stay compliant with the legal requirements and facilitates better management of your business finances.

### **3. **Books of Accounts and Documentation:**

The following are some key records and books you should maintain:

- **Cash Book:** For recording all cash transactions.
- **Bank Book:** For recording all transactions through bank accounts.
- **Sales Register:** To keep track of all sales made.
- **Purchase Register:** To record all purchases made.
- **Invoices and Bills:** All purchase and sales invoices, receipts, and payment vouchers.
- **Other Relevant Documents:** Such as contracts, agreements, and any other documents related to the business transactions.

### **4. **Legal and Practical Implications:**

- **Penalties:** If the tax authorities find discrepancies or if you are selected for a tax audit, failure to maintain proper books could lead to penalties or disallowance of the presumptive profit claim.
- **Financial Management:** Proper books of accounts help in effective financial management and planning for the business.

### **Conclusion:**

While the presumptive taxation scheme under Section 44AD simplifies the tax filing process, it does not exempt you from maintaining books of accounts. Proper record-keeping is crucial for compliance with tax laws, managing your business finances effectively, and addressing any queries or audits by the tax authorities.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now