ITR for Business Income: Tax Rates, Requirements And Due Dates
India has seen significant growth in businesses, especially startups, over the last few years. In fact, 10% of startups are added to the country’s economic ecosystem every year. Moreover, experts have predicted that newer businesses will lead India’s growth in the following years. It’s imperative for businesses to report their income and expenditure to the Income Tax Department. All operating businesses need to file ITR every year.
So, how to file ITR for business income? What’s the eligibility? Let’s dive in.
What is ITR for Business Income?
It’s a prerequisite for every small to big company to file ITR for business. If the business is making profits, they have to pay taxes on the profits. Other than filing taxes, a business could also be required to file TDS or pay tax in advance. ITR for company could also have detailed records of assets a liabilities. While filing ITR for business income, businesses are required to give an account of fixed assets, loans borrowed, loans provided, debtors and creditors of the business while filing their ITR for business income.
Documents Required for Filing ITR for Business Income
The list of documents required for filing an income tax return for a business is as follows:
- Balance sheet of the financial year
- Certificates of TDS (Tax Deducted at Source)
- Audit records
- Copy of challan of income tax payment (self-assessment tax, advance tax)
- Loan documents to seek a rebate
- PAN Card
- Aadhaar Card
ITR for Business Income Eligibility
The structure of a business determines whether it has to file income tax returns or not. Irrespective of whether a business is a proprietorship, partnership firm, private limited company or limited liability partnership, it has to file its tax returns if it meets certain parameters:
- In the case of sole proprietorships, one needs to mention every detail about business income and personal incomes like salary, income from immovable capital assets and income from interests.
- Filing an ITR is mandatory for a business owner if the total income before deductions exceeds the basic taxable limit of Rs. 2.5 lakh for a given financial year.
- Companies, firms and limited liability partnerships need to file their business tax return irrespective of profit or loss or absence of operations.
Requirements for Filing ITR for Business Income
Filing ITR for business income would depend on the type of fire – partnership firm, a proprietorship firm, private limited company, or limited liability partnership. Also, it is mandatory to maintain a book of accounts if you meet any of the following criteria:
- Income more than Rs.1,20,000
- Gross receipts or turnover above Rs.10 lakh
Businesses would need ITR-4 in case they have opted for the presumptive income scheme as per section 44AD and Section 44AE of the Income Tax Act. Businesses, having a turnover of less than Rs.2 crore could choose to be taxed presumptively by the Income Tax Department. However, such businesses would require to declare 8% profits for non-digital transactions and 6% profits for digital transactions, whatever is applicable.
Income Tax Rate for Businesses
The income tax rates for businesses are discussed below:
- Private limited company
The tax rate for private limited companies with turnovers of up to Rs. 50 crores in the previous year are fixed at 25% of their total income.
The tax rate for private limited companies with turnovers of more than Rs. 50 crores in the previous year, is fixed at 30% of their total income.
- Partnership firm
The tax rate for a partnership firm is fixed at 30% of its total income.
- Limited liability partnership
Similarly, the tax rate for a limited liability partnership firm is also fixed at 30%.
- Proprietorship
The income tax rate for proprietorship firms is the same as the income tax rate for individuals.
The table given below illustrates the different income tax slabs and tax rates as per new regime and old regime for individuals below 60:
| Income Tax Slab | Tax Rate as per New Regime | Tax Rate as per Old Regime |
| 0 – Rs. 2,50,000 | Nil | Nil |
| Rs. 2,50,001 – Rs. 5,00,000 | 5% | 5% |
| Rs. 5,00,001 – Rs. 7,50,000 | 10% | 20% |
| Rs. 7,50,001 – Rs. 10,00,000 | 15% | 20% |
| Rs. 10,00,001 – Rs. 12,50,000 | 20% | 30% |
| Rs. 12,50,001 – Rs. 15,00,000 | 25% | 30% |
| Above Rs. 15,00,000 | 30% | 30% |
Income Tax Audit
If the turnover of a business exceeds Rs. 1 Crore, the business should appoint a Chartered Accountant for a tax audit.
A tax audit is done to ensure that the business abides by the rules put in place by the Income Tax Act. It minutely checks books of accounts for any calculation error. A tax audit also helps business owners disclose accurate and appropriate information.
A tax audit is necessary even if the business faces a loss and the owner wishes to carry forward the loss. It is mandatory even if the business profit is less than 8%.
Once a tax audit is complete, tax authorities find it easy to go through the income tax returns of a business.
Due Dates for Filing Returns for Business
The table below provides the important dates related to filing ITRs for businesses:
| Taxpayer | Date of Submitting Tax Audit Report | Date of Filing ITRs for businesses |
| Partnership Firms (Audit Cases) | September 30 2022 | October 30 2022 |
| Partnership Firms (Non-Audit Cases) | July 31 2022 | |
| Limited Liability Partnership Firms (Audit Cases) | September 30 2022 | October 31 2022 |
| Limited Liability Partnership Firms (Non-Audit Cases) | July 31 2022 | |
| Private Limited Companies | September 30 2022 | October 31 2022 |
| Individuals and HUFs (Audit cases) | September 30 2022 | October 31 2022 |
| Individual and HUFs (Non-Audit cases) | July 31 2022 |
Final Word
The Income Tax Department has mandated every business to pay appropriate taxes. The income tax return for a business is commonly called a business tax return. Businesses need to know about business tax return filing so that they can file their respective returns accurately. This guide provides the crucial details that business owners need to know to file their ITRs.
FAQs on Business Tax Return Filing
Ans: Yes, even small businesses need to pay taxes in India. But they can avail many tax benefits. For example, it is natural for a business to have preliminary expenses. Section 35D of ITA enables small businesses to seek tax deductions on preliminary expenses.
Ans: Yes. It is mandatory for businesses and taxpayers to link their Aadhaar numbers while filing income tax returns. In addition, an Aadhaar number is required when one is applying for a Permanent Account Number (PAN). Linking Aadhaar number with PAN is mandatory as per the latest government notification.
Ans: Yes, one can revise their income tax return. Section 139 (5) enables a taxpayer to revise his/her income tax return before the IT Department processes it or before the assessment year ends. If a taxpayer has forgotten to add important information or claim deductions/exemptions, he/she can upload a revised ITR form.
Ans: Yes, one can pay income tax after the due date, but a fine will be applicable. The taxpayer has to pay Rs. 5,000 as a penalty for delayed payment. But if the person earns less than Rs. 5 Lakh, then he/she has to pay Rs. 1,000 as a fine.
Ans: The steps to view e-filed returns are as follows:
Step 1: Visit the official e-filing portal of the IT Dept
Step 2: Navigate to ‘My Account’ and select ‘View e-filed returns/forms’
Step 3: Then, choose the relevant option from the dropdown menu and press the ‘submit’ button to check the details of e-filed returns/forms.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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