A housewife running a beauty parlour at home

Hi,

If she maintains a register mentioning name, phone number etc. Of her clients datewise, that's enough.

Yes, she can keep her money in cash but it's not advisable.

Further, it's advisable to file return of income. She can use form ITR 1 mentioning it as a other income. She also has a choice to fill ITR 3 and mention it as business income. But consider the quantum I would suggest to fill ITR 1

Please feel free to call revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Hi,

I understand that this will be a all cash business so it will be advisable to keep records of the clients on a day to day basis so that the same can be shared in case asked by the IT department.

There is no restriction of keeping earnings in cash at home. She can definitely keep the same at home but it is advisable to deposit the same in bank as the income is anyways being disclosed.

The ITR 3 is applicable for individual and HUF who have income from proprietary business or are carrying on profession. So she can file her returns using ITR3.

hope that clarifies.

Regards,

Nikhil.

Normal record of customers will suffice.

She can keep her earnings at home .Important is to declare your income.

To file return it is advisable to use ITR 1.

And money kept in bank account will give your interest income so why not to deposit.

Hi,

Thanks for the query !

1. For income tax return purposes, there are no records required to be maintained till the turnover or total sales crosses 2 crores. Considering the income stated by you which is INR 1,50,000/-, she is not required to file the income tax return too. However, for compliance purpose you may file a tax return with no tax liability as the income is below basic exemption limit of INR 2,50,000/-

2. She can keep her earnings the way she wants. However, it is advisable to keep the same in a bank account due to rigid rules getting introduced by the government in the coming scenario. Also, if she would keep the same, she can earn some savings bank interest, whereas in the home, the loose cash will generate any value addition.

Should you have any other queries, please feel free to revert.

Thanks

Damini

1. Law Applicable

? Under INCOME TAX ACT all proprietors below the age of 60 years are required to file

income tax return if total income exceeds Rs. 2.5 lakhs.

? Under INCOME TAX ACT in the sole proprietorship, you can fill the form ITR 4 for filling

the Income tax.

? Under section 44AA of Income Tax Act You have to maintain books of accounts of your

business’s income in following situations:

? If the business income exceeds Rs 1,20,000 or total sale, turnover or gross receipts

thereof are in excess of 10,00,000 in any of the 3 years immediately preceding the PY.

? If the business is newly set up and your income or turnover or total sales or gross

receipts are likely to exceed the above-said amount.

If you do not exceed the above-given limit then you are not required to maintain books of account

under section 44AA.

? Further as per Section 44AD – presumptive scheme

? Businesses with turnover up to Rs 2 crores can opt for presumptive taxation scheme.

? Your turnover must be less than Rs 2 crores

? Your NET income shall be considered as 8% of your turnover (net income will be

considered 6% in case of digital receipts)

? You don’t have to maintain accounting records

? You don’t have to pay advance tax (from FY 16-17, assessee opting for presumptive

taxation has to pay 100% advance tax by 15th March of that particular financial year)

? You don’t have to get your accounting records audited

? You can file your tax return in ITR-4S a much shorter and simpler form than ITR-4

2. Facts of the case

Running beauty parlor at home. There are no other employees. Her total income from this

work is around 150000/- annually. What records does have to be maintained? And which

tax forms does she have to fill?

1. Which records does my wife need to maintain for income tax purposes?

2. Whether she can keep all her earnings (below Rs 200000/-) as cash at home?

3.Analysis/ Conclusion

Based on the above facts and law applicable:

? As the business income is in excess of Rs 1, 20,000 records are required to be

maintained in the form of books of accounts.

? Moreover if you opt for the presumptive scheme under section 44AD by computing the

income @8% of the turnover. In this case no books of accounts and records are required

to be maintained.

? If the above scheme is opted than there will be no allowance of any expenses.

? Form ITR 4 is required to be filed in case of proprietors.

? Till date, there is no restriction on the amount of cash (in Indian Rupees) that can be

stored by an Indian living in India. However, if a recent recommendation of the SIT on

black money is implemented, this may be restricted to just Rs.15 lakhs in the future.