You can still set off and carry forward the business losses. For AY 2023-24, file ITR-3 and show all previous years losses
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Does filing ITR 4 negate or void business losses from previous years that were filed in ITR 3 in pre
I had business losses in 17-18, 18-19, 19-20 and they were filed through ITR form 3 in the appropriate years. They were filed within the due date. My accountant started filing ITR 4 from FR 20-21 onwards without informing me. It is my fault that I did not check and I was also clueless on the various tax forms and what they mean. As per my knowledge business losses, if filed in the right time period, can be carried forward for 8 years and used to set off profits in those years till they run out. However when I finally checked my IT returns this year I saw that ITR 4 does not have any place for carry forward of losses and that is why I started checking. Have my previously filed business losses now become null and void going forward as a result of filing ITR 4 in the middle, or can I still continue to carry them forward and use them to set off income. If they are still allowed then how should I proceed? Just file ITR 3 and continue carrying over the losses from aforementioned years or will I need to do some rectification or something else? Please advise.
Asked 1 year ago in Income Tax
If a taxpayer chooses the presumptive taxation scheme while filing Return (ITR 4), he will not be allowed to set off any carried forward losses from earlier years against the income shown under the presumptive taxation scheme. The losses will be available for set off only when the taxpayer reverts to the regular taxation scheme. The set off of losses must be within the allowed time, i.e, 8 years from the relevant assessment year. But he will have to maintain books of accounts and also get these audited.
The Business losses for FY 17-18,18-19 and 19-20 can still be carried forward and set off can be claimed since the ITR's of the respective years were filed on time which is requirement as per law for carry forward and setoff provided it is within the time frame of 8 years.
You can file ITR 3 for AY 2023-24 and show all the business losses.
So my follow-up question is, it turns out that out of the three years my accountant filed ITR 3, he carried forward previous years losses from the first year to the second year, but did not do so in the third year (19-20). In 19-20 he only filed the losses for 19-20. - Can I still utilize the losses from 17-18 and 18-19 as they were filed properly in time in their respective years? - If I had paid some taxes on the business income in the years ITR 4 was filed (I ended up paying a small amount and not realizing it since it was simply deducted from my TDS and I did not have to pay out of pocket. My mistake again) then does that change anything moving forward or does the same remain true - that I can simply go back to ITR 3 and claim the previous losses? - When I file ITR 3 for this year, can I use the presumptive income scheme in ITR or would I have to go back to regular taxation scheme and only then I can utilize my previously filed losses against any income from this year?
Asked 1 year ago
Hi,
Please check in the ITR for FY 19-20 the previous years losses being reflected under Schedule CFL (carry forward losses for past years ) whether the amounts are reflecting or not,if the same were filed in FY 17-18 and 18-19 for the respective years too then they should be reflecting there.
- Yes you can utilize.
- No paying taxes does not change the scenario for valid claims of past year losses.
For the last part of your query I would request to you to please clarify as to under which section is presumptive income been considered is it Section 44AD or Section 44ADA which shall be determined on the basis of nature of business/profession.
Hope it helps.
Thanks
- Yes
- Yes, file ITR-3 for AY 2023-24 and show the previous year losses
- In ITR-3, you can show the business income as presumptive income
For detailed discussion you may opt for phone consultation
(i) So long as the returns showing loss were filed within the due dates, carry forward of the same won't be an issue.
(ii) To go back to regular taxation scheme from the current presumptive income scheme, you have to maintain the books of account, get these audited by a CA and then submit the Return (ITR 3). Due dates for submitting the audit Report is 30.09.23 and ITR 3 where audit has been done is 31.10.23.
Hope this clarifies the issue..
You can file ITR 3 for AY 2023-24 and claim the brought forward losses. Just check if the losses were appearing in 19-20 or 18-19 whenever last ITR 3 was filed in schedule CFL. You can still go with 44AD even under ITR 3 and claim the losses as well.
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