Key Points to Consider for Business Tax Filing

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Total Income Assessment: Every business must compute its total income regardless of profit or loss. If the total income surpasses the basic taxable threshold before deductions, filing an income tax return is mandatory.
Gross Total Income Criteria: Gross Total Income exceeding Rs. 2.5 lakhs signifies surpassing the basic taxable threshold. For business tax return filing, income before deductions exceeding Rs. 3 lakhs is considered.
Uniform Taxation for LLPs, Companies, and Firms: LLPs, companies, and firms are all subject to a tax rate of 30%, obligating them to file tax returns regardless of financial outcomes or undertaken operations.

How IndiaFilings Can Assist with Business Tax Return Filings

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With our user-friendly platform and seasoned team, the process becomes less daunting, ensuring business tax return filing deadlines and rules are followed. We will keep you well-informed about crucial deadlines, assist in selecting the appropriate business income ITR form, and guide you through a meticulous, error-free filing process. With IndiaFilings, you can confidently handle your business tax filing, saving time and minimizing the complexities involved.

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Business Tax Filing FAQ’s

When must a company tax return be filed?

The company /business subject to audit can file their returns by October 31 of the assessment year. If a taxpayer has an international or specified domestic transaction that is required to furnish a report in Form No. 3CEB, the due date is November 30.
For more details on the due date to file a company tax return, refer to our article.

Which ITR should a company file?

The type of ITR (Income Tax Return) a company should file depends on the type of company it is.

Form ITR-4 – This ITR can be used to File ITR for those firms other than LLPs, which have a total income of up to ?50 lakhs, and that income is calculated under Sections 44AD, 44ADA, 44AE
Form ITR-5 – This ITR can be used for filing ITR for LLPs and partnerships, not ITR 7.
File ITR-6 – Those companies not claiming exemption under Section 11 can use ITR-6 to file an Income tax return.
File ITR-7 – This can be used for those companies that are mandated to file returns from Sections 139(4A), 139(4B), 139(4C), and 139(4D) only.

What happens if a company does not file ITR?

If a company fails to file its ITR for business income, it may face the following consequences:

Penalty: The company may be levied with a penalty for non-filing of ITR; as per section 234F of the IT Act, a fine of Rs.10,000 will be charged for failing to file tax returns,
Interest: In addition to the penalty, the company may also be charged with interest on the outstanding tax amount. Moreover, a delay in ITR filing can result in interest being charged under Section 234A of the Income Tax Act 1961
Prosecution: In severe cases, the company may be prosecuted for non-compliance, leading to the imprisonment of up to 7 years and/or fines.
Disqualification of Directors: The Company’s directors may be disqualified from being appointed directors of any company for up to 5 years.
Loss of Eligibility for Government Contracts: The Company may be disqualified from bidding for government contracts or availing government facilities if it has not filed its ITR.

What are the different types of Business Tax Filing?

The different types of business tax filing are named based on business entities that are entitled to file these returns, i.e. different structure of businesses and their names accordingly.

Sole proprietorship tax return filing
Partnership firm tax return filing
Limited Liability Partnership tax return filing
Company tax return filing

Can ITR be filed for the previous year?

Yes, you can file belated ITRs, anytime up to one year from the end of the relevant assessment year. You can submit tax returns up to three years late.

For AY 2022-2023 Returns & Forms Applicable applicable to Individual who has business Income?

ITR-3 – Applicable for Individual & HUF
ITR-4 (SUGAM) – Applicable for Individual, HUF & Firm (Other than LLP)
Form 16A & Form 26AS
Form 3CB-CD & Form 3CEB
Form 15G& Form 15

Who should pay advance tax?

If the total tax liability is Rs.10000 or more in a Financial Year, then the (taxpayer) businessman has to pay advance tax in 4 installments:

15 June
15 September
15 December
15 Marc

How Income Tax Is Calculated On Business Income?

Normal provision and presumptive taxation are two different ways to calculate the taxable business income. With normal provision, the taxable income is calculated by deducting the cost of sold goods and expenses from the total sales.

What are the criteria for opting for the Presumptive Taxation Scheme?

Small businesses or firms that do not maintain books of accounts can opt for Presumptive Taxation. For businesses, the option is available for turnover or receipts up to Rs.2 Crore. Businesses opting this scheme should offer at least 8% of the turnover or receipts as income and 6% in case of payment via banking channels & electronic mode

With presumptive taxation, the taxable income is a fixed percentage of the total sales. What Are the Tax Rate For Businesses?

For instance, if you own a business and are below 60 years, your income tax for business in India will be based on these slabs:

Income up to Rs. 2.5L- NIL
Income between Rs. 2.5-5L lakh- 5%
Income between Rs. 5-10L- 20%
Income above Rs. 10L – 30

How to calculate self-employment tax?

Persons who are self-employed need to pay their income tax based on their earnings. Deduct the expense from the revenues, and you can calculate the tax based on the balance. You will need to fill out the ITR-3 or ITR-4 form.

For small businesses, which tax return form do I use?

Small businesses need to file ITR-4 if they have opted for a presumptive tax scheme. However, if the company’s turnover exceeds Rs.2 Crores, the taxpayer will have to file ITR-3.

What are the surcharge and cess for business Income Tax returns?

If your annual income is between Rs. 5L to Rs. 1 crore, you will have to pay a surcharge of 10% above the income tax on business. If it is above Rs. 1 crore, the surcharge will be 15%. There is also an additional Health and Education cess of 4%.
If you have a Limited Liability Partnership or a Firm, you will be taxed at 30% if your taxable income is up to Rs. 1 crore. For a Company, the tax rate is 30% but if your turnover is less than Rs. 250 Crores, the tax rate will be 25%.

Is it necessary for a company to file a tax return if it has not carried out any operations?

IT returns must be filed by all companies, whether they have engaged in any business activities in the financial year or not. Regardless of profit or loss, companies need to file income tax. Companies that are dormant and have undertaken no business decisions in a year are still expected to file returns.

Is Tax Audit mandatory for business tax return filing?

For businesses with a turnover above Rs. 1 crore, a tax audit is mandatory. Similarly, for professionals with turnovers of Rs. 50 lakhs also require a tax audit.

Who Should File Business Tax Return?

Tax file return is compulsory for all qualified businesses operating under Income-tax Act, 1961/ Income-tax Rules, 1962. 2.5 lakh is the basic taxable limit, if the business income before the deduction is above 2.5 lakh then such a firm needs to file the business tax return.

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What income tax services do you offer?

Our services include tax planning, income tax return filing, and addressing any income tax-related queries, ensuring comprehensive income tax management. We also utilizes the small business tax filing software to streamline ITR filing process.

How to file taxes for small business owners?

Here is the brief process on how to file taxes for small business owners. First, determine your business type (sole proprietorship, partnership, etc.), then maintain accurate records of income and expenses. Calculate your taxable income by deducting allowable business expenses. Choose the correct Income Tax Return (ITR) form. File your ITR online through the Income Tax Department’s portal, pay any due taxes, and verify your return using the specified methods.

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