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.
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.
The list of documents required for filing an income tax return for a business is as follows:
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:
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:
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.
The income tax rates for businesses are discussed below:
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.
The tax rate for a partnership firm is fixed at 30% of its total income.
Similarly, the tax rate for a limited liability partnership firm is also fixed at 30%.
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%|
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.
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|
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.
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.
|Section 145A||Section 80P||Section 92CD|
|Section 281||Section 32(2)||Section 270A|
|Section 1399||Section 192A||Section 11|
|Section 35AD||Section 80C||Section 32|
|Section 206AA||Section 92E||Section 9|
|Section 153||Section 10(10D)||Section 194DA|
|Section 10AA||Section 80GG||Section 80TTB|
|Section 80JJAA||Section 1940||Section 23B|
|Section 206AB||Section 44AB||Section 87A|
|Section 115JB||Section 154||Section 194D|
|Section 194J(1)(ba)||Sectio 80U||Section 194K|
|Section 56-59||Section 80TTA||Section 234C|
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