Income Tax for Self-Employed or Businessman

Income Tax Returns for Self-Employed, Firm, Llp, Opc & Private Limited

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Business Income
 

File Income Tax on Business Income. Prepare your business accounts and file returns with Tax Robo today to prevent unwanted penalties and late fees.


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Business Income 


An individual who earns an income by selling their services to others without entering into a legal contract with them is called a self-employed individual.

Self-employed individuals are different from salaried individuals, who work for an employer for a salary which is usually received at the end of the month.

In simpler terms, self-employed individuals are Business owners.

Doctors, Lawyers, Architects, Astrologers, Freelancers etc. who are approached by people for their services and in exchange these professionals charge a service fee to them, are all examples of self-employed individuals or Business owners.

Money earned by them is called Business Income, unlike Salary received by Employees.

Unlike employees, whose Income Tax is already deducted from their salaries by their employer, a Business owner has to file their own Taxes on earned Business Income.

How to calculate Taxable amount in Business Income? 

 Tax computation for an income earned via Business is done by calculating all expenses made on the Business such as rent, electricity, paying salary to employees, cost of raw materials, and other costs incurred.

This figure should be subtracted from the total earnings in a particular period including losses, if any incurred during that period.

The figure finally received is the net profit or earning for that particular period of time, say for example 1 month.

Now Taxes will be applied on this profit only.

Business Income Tax Slab for AY 2020-21

Profit and Gain from profession is Taxable at the same rates as other Income. It is levied at the following rates for financial year 2019-2020, depending on the category of person
In the case of Individuals whose age is below 60 years, Hindu Undivided Family, Association of Persons, Body of Individual, Artificial Juridical Person


For Income up to Rs. 2,50,000 Nil
For Income between Rs. 2,50,000 and Rs. 5,00,000 5% of the amount in excess of Rs. 2,50,000
For Income between Rs. 5,00,000 and Rs. 10,00,000 20% of the amount in excess of Rs. 5,00,000
For Income above Rs. 10,00,000 30% of the amount in excess of Rs. 10,00,000


In the Case of Senior Citizens whose age is between 60 years and 80 years

For Income up to Rs. 3,00,000 Nil
For Income between Rs. 3,00,000 and Rs. 5,00,000 5% of the amount in excess of 3,00,000
For Income between Rs. 5,00,000 and Rs. 10,00,000 20% of the amount in excess of Rs. 5,00,000
For Income above Rs. 10,00,000 30% of the amount in excess of Rs. 10,00,000


In the case of Super Senior Citizens whose age is 80 years or above

For Income up to Rs. 5,00,000Nil
For Income between Rs. 5,00,000 and Rs. 10,00,00020% of the amount in excess of Rs. 5,00,000
For Income above Rs. 10,00,00030% of the amount in excess of Rs. 10,00,000
Tax filing for self-employed Individuals/Businessmen
A self-employed individual needs to file ITR-4 (Income Tax return - 4). They are also eligible for deductions which will reduce the amount of Income Tax to be paid, provided they furnish valid proof in record.

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Income Tax Filing Packages

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Proprietor / Trader Income

₹2499 .00

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  • Income less than 10 Lakhs
  • Business Income – Small Business
  • Preparation of Computation, Income Tax Return, 26AS, P&L and Balance Sheet.
  • House Property
  • Interest Income
  • Salary

Tax Robo Premium
Proprietor / Trader Income

₹4999 .00

* All Exclusive Tax

  • Income less than 15 Lakhs
  • Business Income
  • Preparation of Computation, Income Tax Return, 26AS, P&L and Balance Sheet.
  • Salary
  • House Property
  • Interest Income
  • More than One Form16
  • Free Tax Consulting

Tax Robo Family Auditor
Proprietor / Trader Income

₹9499 .00

* All Exclusive tax

  • Income More than 15 Lakhs
  • Business Income
  • Preparation of Computation, Income Tax Return, 26AS, P&L and Balance Sheet. 
  • Salary
  • House Property
  • Interest Income
  • More than One Form 16
  • Free Tax Consulting
  • Free Tax Planning  

Tax Robo Basic
Firm

₹4499 .00

* All Exclusive Tax

  • Income less than 10 Lakhs
  • Business Income – Small Business
  • Preparation of Computation, Income Tax Return, 26AS, P&L and Balance Sheet.
  • House Property
  • Interest Income
  • Salary

Tax Robo Premium
Firm

₹7499 .00

* All Exclusive Tax

  • Income less than 15 Lakhs
  • Business Income
  • Preparation of Computation, Income Tax Return, 26AS, P&L and Balance Sheet.
  • Advance Tax
  • Salary
  • House Property
  • Interest Income
  • More than One Form16
  • Free Tax Consulting

Tax Robo Family Auditor Firm

₹12999 .00

* All Exclusive tax

  • Income More than 15 Lakhs
  • Business Income
  • Preparation of Computation, Income Tax Return, 26AS, P&L and Balance Sheet. 
  • Advance Tax
  • Salary
  • House Property
  • Interest Income
  • More than One Form 16
  • Free Tax Consulting
  • Free Tax Planning  

Five Main Heads of Income 

Income from Salary

  1. Salary is defined as the remuneration that a person receives periodically for rendering services based on an implied or express contract.
  2. The Salary for the purpose of calculation of income from Salary includes:
  • Wages
  • Pension
  • Annuity
  • Gratuity
  • Advance Salary paid
  • Fees, Commission, Perquisites, Profits in lieu of or in addition to Salary or Wages
  • Annual accretion to the balance of Recognized Provident Fund
  • Leave Encashment
  • Transferred balance in Recognized Provident Fund
  • Contribution by Central Govt. or any other Employer to Employees Pension A/c as referred in Sec. 80CCD.


Income from House Property

i. Basis of Charge [Section 22]:

  • Income from house property shall be Taxable the house property should consist of any building or land.

ii. The Gross Annual Value of the house property shall be higher of following:

  • Expected rent
  • Rent actually received or receivable after excluding unrealized rent but before deducting loss due to vacancy

iii. Deductions

Municipal Taxes

Standard Deduction [Section 24(a)]

30% of net annual value of the house property is allowed as deduction

Interest on Borrowed Capital [Section 24(b)]

Let-out property - Actual interest incurred on capital borrowed

Self-occupied property - Interest incurred on capital borrowed allowed as deduction upto Rs. 2 lakhs. The deduction shall be allowed acquisition or construction of house property is completed within 5 years.

Maximum loss set off allowed in a Financial Products year is limited upto Rs. 2 lakhs, remaining loss can be carried forward to future years, 8 years in total



Income from Capital Gains

Any Income derived from a Capital asset movable or immovable is Taxable under the head Capital Gains under Income Tax Act, 1961.
Short Term Capital Gains:
  • Sold a Capital asset within 36 months and Shares or securities within 12 months of its purchase then the gain arising out of its sales after deducting there from the expenses of sale (Commission etc) and the cost of acquisition and improvement is treated as short term capital gain and is included in the income of the Taxpayer.

Taxability of short term capital gains:

  • Section 111A of the Income Tax Act provides that those equity shares or equity oriented funds which have been sold in a stock exchange and securities transaction Tax is chargeable on such transaction of sale then the short term capital gain arising from such transaction will be chargeable to Tax @10% upto assessment year 2008-09 and 15% from assessment year 2009-10 onwards.
Long Term Capital Gain
  • A Capital Asset held for more than 36 months and 12 months in case of shares or securities is a long term capital asset and the gain arising there from is a long term capital gain. Long term capital gains are arrived at after deducting from the net sale consideration of the long term capital asset the indexed cost of acquisition and the indexed cost of improvement of the asset.

Taxation of Long term capital gains

  • The long term capital gains are Taxed @ 20% after the benefit of indexation as discussed above. No deduction is allowed from the long term capital gains from Section 80C to 80U. But in case of individual and HUF where the Income is below the basic exempted limit the shortage in basic exemption limit is adjusted against the long term capital gains.



Income from Profits and Gains of Business or Profession

Under Section 28, the following income is chargeable to Tax under the head "Profits and Gains of Business or Profession":

  • Profits and Gains of any Business or Profession.
  • Any compensation or other payments due to or received by any person specified in Section 28(ii).
  • Income derived by a trade, professional or similar association from specific services performed for its members.
  • The value of any benefit or perquisite, whether convertible into money or not, arising from Business or the exercise of a Profession.
  • Any interest, salary, bonus, commission or remuneration received by a partner from firm .
  • Fair market value of inventory as on the date on which it is converted into, or treated as, a capital asset determined in the prescribed manner.
  • Income from speculative transaction.

Income from Other Sources

"Income From Other Sources" is any income which is not specifically Taxed under any other head of income will be

  • Taxed under this head.
  • Section 56(2)(i), Dividends
  • Winnings from lotteries, crossword puzzles, races including horse races, card game and other game of any sort, gambling or betting of any form whatsoever, are always Taxed under this head.
  • Interest Income
  • Gifts received by an individual

Advantages of Filing Income Tax (IT) Returns

Eligibility

  • No Benefits In Future For Mere Filing Of NIL Income Tax Return.
  • Tax Returns Are Now Eligible Documents.

Tax Planning

  • Plan & Save Your Income Tax Payment

Risk

  • Carry Forward Loss Only The Return Filed Before The Due Date
  • Do Not Claim Wrong Income Tax Refunds

Compliance

  • Compare The Services Not Cost Of Filing Income Tax Returns.
  • First Of Wholeheartedly Plan For Taxes, Pay Taxes and Enjoying Without Non Compliances.


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Document Required for E-Filing Income Tax Return

Proof of Income

  • Form 16 Copy – Part A & Part B
  • Fixed Deposits
  • Capital Gain Statement Share Broking
  • FD Interest Certificate
  • Invoice Copy
  • Contract Copy

Proof of Deduction

  • Life Insurance Premium
  • Medical Insurance Premium
  • School Fees Receipts
  • House Property Tax
  • Interest Certificate Housing Loan
  • Tax Savings Documents
  • Additional Deduction Documents

This may come as a surprise but you don't need any documents or proofs to attach with your Income Tax Returns.

All you need is your Aadhar ID linked with your PAN.

You need documents ONLY IF YOU SEEK TO CLAIM DEDUCTIONS while filing Income Tax.

You DO NOT NEED TO ATTACH ANY DOCUMENTS in your IT return application. Fill your Income Tax return honestly and claim deductions that genuinely apply to your application.

You may need documents only if an Income Tax assessing officer sends you a notice asking you to present those documents before them. Till then, procure all the documents that may be needed and keep them safe.

Advantages & Benefits of E-Filing Income Tax Returns With Tax Robo

Guaranteed

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Maximum Refund

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  • Free D-mat Account Opening
  • Claim Your Eligible Tax Deductions.

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