What if there is no business income in one year

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This discussion addresses a taxpayer who had business income under Section 44ADA last year but has none in the current financial year, only bank interest and capital gains. The core question is whether to file ITR 2 or ITR 3, and if opting for the old tax regime is possible with ITR 2. Advice suggests that if the GSTIN is cancelled or turnover is nil, ITR 2 is viable. Furthermore, the taxpayer can continue with presumptive taxation (Section 44AD/44ADA) in future years even after a year with no business income, without needing an audit under Section 44AB.

suren

suren (Querist)

01 July 2024 Dear All,

The assessee has declared his income last year and filed form ITR 3 as there was a business income declared U/s.44ADA. He has GST number also. However, in last financial year (2023-24 AY: 2024-25), he does not have any business income. His income comprises of bank interest and long term Capital Gain.
Which form he has to use ITR 2 or ITR 3? As old regime is beneficial to him, question is can he file ITR 2 where opting for Old regime is simply by selecting while filing return? Or he has to file form 10-IEA and ITR return 3?

Please advise.

Thanks and regards

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

01 July 2024 If GSTIN cancelled or TO declared be NIL, can go ahead with ITR2.

suren

suren (Querist)

08 July 2024 Thank you Sir. Could you please guide me what will happen to his status next year? Whether he can continue filing his return U/s. 44AD/44ADA if there is Business or Profession Income next year? Or he will be considered to be opted out of presumptive taxation and has to get accounts audited u/s. 44AB?
Pleas clarify.

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

08 July 2024 No opted out. He can continue with sec. 44AD assessment.
Considering the development in ITD since last two three years, I would suggest to file ITR 3 with sec 44AD continued with just Rs. 1 as turnover..

suren

suren (Querist)

08 July 2024 Thank you Sir for your expert opinion.

Message likes : 1 times

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

08 July 2024 You are welcome.

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