Sir, I need your guidance regarding my Income Tax Return. I run a kirana store where I sell grocery items. Along with the grocery business, I also provide money transfer and utility bill payment services. For both businesses, I receive payments in cash as well as through UPI. All the cash collections are deposited into my current account. * Grocery sales are ₹58 lakh, and these sales are reported in GST. * I file my Income Tax Return under Section 44AD for the kirana business. * From the money transfer and utility bill payment services, around ₹48 lakh has been collected from customers. However, this amount belongs to customers, and my actual commission income is only about ₹2.5 lakh. My question is: How should I report this commission income in ITR-4? Should I show only the commission income of ₹2.5 lakh as my business receipts, or should the total customer collections of ₹48 lakh also be reported anywhere in the return? Please guide me on the correct treatment in ITR-4.
Bottom line: Report only your commission (~Rs. 2.5 lakh) as income — the ~Rs. 48 lakh collected for customers is a pass-through, not your income or turnover. Two important points follow.
1. The form. Commission/agency income is excluded from presumptive taxation by Section 44AD(6), so it cannot be shown under 44AD and cannot go in ITR-4. File ITR-3: keep the kirana business under 44AD as you do now, and show the money-transfer commission (~Rs. 2.5 lakh, net of expenses) as normal business income. The Rs. 48 lakh is not reported as income, but keep customer-wise records to explain the inflows, since your bank and the department's AIS will see them. GST at 18% applies on the commission (agency/intermediary service) — include it in your returns; the pass-through is not part of your GST turnover.
2. A caution. You haven't mentioned whether you hold a valid authorisation/licence for the money-transfer and bill-payment service. If you are an authorised Business Correspondent/agent, well and good — but note that even a licensed agent's funds move through the authorised system, never through his own bank account. So customers' money flowing into and out of your own account suggests the service may be running without the required authorisation. This activity is RBI-regulated, and routing third-party funds through your personal/current account is exactly the "money-mule" pattern RBI has warned against — it can lead to your account being frozen and to anti-money-laundering and tax trouble.
The way out. If you are authorised, make sure the funds flow only through that channel and never your own account. If not, run this only as a retailer/agent of a bank's BC network or an RBI-authorised BC/aggregator (and a BBPS agent for bills), earning only the commission. Either way: stop routing customers' money through your own account, keep the two businesses separate, file as above (ITR-3), and given the amounts involved, have a CA regularise this and review your earlier returns.