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Business Tax Return Filings
- Filing business tax returns is crucial for any company, as it documents the company’s income and expenses.
- Filing Champs offers a simplified process for filing business tax returns in India.
- Their aim is to make tax filing easier for businesses of all sizes, ensuring compliance with regulations and meeting deadlines.
- With knowledgeable staff, Filing Champs ensures a stress-free process for businesses.
- Whether your company is small or well-established, Filing Champs can assist in streamlining your business tax filing process.
- Contact them now to learn how to file business tax returns more easily and without stress.
What is a business tax return?
- A business tax return is an income tax filing for firms, detailing their revenue, expenses, and tax-related information.
- It includes reporting income tax returns and, for businesses, also covers Tax Deducted at Source (TDS).
- This filing is an annual requirement and serves as a comprehensive financial statement for the company.
- Apart from income and expenses, it also documents other financial aspects like fixed assets, loans, debtors, and creditors within the business.
Income Tax Return Filing in India
- Income tax returns in India are mandatory for individuals and companies with Gross Total Income (GTI) exceeding Rs. 3 lakhs annually.
- Different types of income tax returns exist, tailored to various categories of taxpayers.
- Benefits of filing income tax returns for businesses include:
- Refund Claims: Timely filing can lead to potential refunds, aiding cash flow.
- Carry-forward of Losses: Losses can be carried forward and adjusted against future profits, reducing tax liabilities.
- Loan Applications: Filed returns serve as evidence of financial stability, facilitating loan approvals.
- Evidence for Transactions: Tax returns provide proof of financial activities for legal or contractual purposes.
- Compliance with Law: Filing ensures adherence to tax regulations, avoiding penalties.
- Transparency: Transparent records enhance credibility and trust among stakeholders.
- Audit Preparedness: Filed returns help prepare for potential tax audits with accurate financial statements.
- Business Growth: Accurate reporting aids in informed decision-making for business growth.
- Avoiding Notices: Timely filing reduces the risk of receiving queries or notices from tax authorities.
- Availing Tax Benefits: Enables businesses to legally optimize tax liabilities and avail tax benefits and deductions.
Advantages of PropriWho Should File a Business Tax Return?etorship
- All eligible firms in India must file a tax return according to Indian tax laws, based on their business structure.
- The types of businesses that need to file tax returns include:
- Sole Proprietorship
- Partnership Firm
- Limited Liability Partnership (LLP)
- Companies such as Private Limited Company and One Person Company
Types of Business Tax Return Filing
- Business tax return filing categories are determined by the types of business entities permitted to file them.
- These categories align with various organizational forms and their corresponding titles:
- Partnership Firm Tax Return Filing
- Proprietorship Tax Return Filing
- Limited Liability Partnership Tax Return Filing
- Company Tax Return Filing
Requirement for Filing Proprietorship Tax Return
Proprietors must file income tax returns if their total income:
- Reaches Rs. 2.5 lakhs, regardless of age.
- Exceeds Rs. 3 lakhs if they are between 60 and 80 years old.
- Surpasses Rs. 5 lakhs if they are 80 years old or older.
Income Tax Rate for Proprietorship
- The income tax rate for proprietorships is the same as the individual income tax rate.
- Proprietorships are taxed at slab rates rather than flat rates like LLPs and companies.
- For the assessment year 2023–2024, the income tax rate for proprietorships with an owner under 60 years old follows the slab rates.
Proprietorship Tax Rate AY 2024-25| FY 2023-24 under Normal Tax Regime
Proprietorship Tax Rate AY 2023-24| FY 2022-23– Proprietor’s age is less than 60 years
| Net Income Range | Rate of income-tax (%) |
|---|---|
| Up to Rs.2,50,000 | – |
| Rs.2,50,001 to Rs. 5,00,000 | 5 |
| Rs. 5,00,001 to Rs. 10,00,000 | 20 |
| Above Rs. 10,00,000 | 30 |
Ownership Tax Rate for FY 2022–2023: The proprietor is between 60 and 80 years old.
If a proprietor turns sixty during the preceding year and was under eighty on the last day of the preceding year, they are subject to the following tax rate:
| Net Income Range | Rate of income-tax (%) |
|---|---|
| Up to Rs. 3,00,000 | – |
| Rs. 3,00,001 to Rs. 5,00,000 | 5 |
| Rs. 5,00,001 to Rs. 10,00,000 | 20 |
| Above Rs. 10,00,000 | 30 |
Proprietorship Tax Rate AY 2023-24| FY 2022-23–Proprietor’s age is above 80 years
| Net Income Range | Rate of income-tax (%) |
|---|---|
| up to Rs. 5,00,000 | – |
| Rs. 5,00,001 to Rs. 10,00,000 | 20 |
| Above Rs. 10,00,000 | 30 |
Rates of surcharge
In respect of a Proprietor, the rate of surcharge for the Assessment Year 2023-24 is tabulated here:
| Range of Income | Surcharge Rate |
|---|---|
| Rs. 50 Lakhs to Rs. 1 Crore | 10% |
| Rs. 1 Crore to Rs. 2 Crores | 15% |
| Rs. 2 Crores to Rs. 5 Crores | 25% |
| Above Rs. 5 Crore | 37% |
Surcharge Rates under Alternate Tax Regime:
- Under Section 115BAC, if a proprietor opts for the alternate tax regime for AY 2023–2024, the surcharge rate is reduced to 25% from 37%.
Tax Audit Requirements:
If a proprietorship company’s total sales turnover for the fiscal year exceeds Rs. 1 crore, an audit would be necessary. If a professional’s total gross receipts for the financial year under review exceed Rs. 50 lakhs, an audit would be necessary.
Due Date for Filing Proprietorship Tax Return
- Proprietorship companies with total sales turnover exceeding Rs. 1 crore require an audit.
- Professionals with total gross receipts exceeding Rs. 50 lakhs also need an audit.
Due Dates for Filing Tax Return:
- For proprietorships not requiring audit, the income tax return is due on July 31.
- If an audit is necessary, the return deadline is extended to September 30.
ITR Forms for Proprietorship:
- Proprietorship businesses can file either Form ITR-3 or Form ITR-4-Sugam.
- Form ITR-3 is for proprietors of private businesses or Hindu undivided families.
- Form ITR-4-Sugam is for proprietors opting for presumptive taxation.
Partnership Firm Tax Return Filing
- Partnership businesses must file income tax reports annually, irrespective of whether they made a profit or incurred a loss.
- According to the Income Tax Act, partnership firms are considered separate legal entities for tax purposes.
- Consequently, partnership enterprises are subject to income tax rates similar to those applicable to Indian corporations and limited liability partnerships.
Proprietorship vs Limited Liability Partnership (LLP) vs Company
- All partnership firms, regardless of profit or loss, must file income tax returns every year.
- If a partnership firm had no business activity during the year, it must still file a NIL income tax return before the deadline.
Income Tax Rate for Partnership Firms:
- Partnership firms are taxed at a rate of 30% of their total income.
- If the total income exceeds Rs. 1 crore, a 12% income tax surcharge is applicable on top of the income tax.
- Additionally, partnership firms are subject to a 4% Health and Education Cess.
Minimum Alternate Tax (MAT) for Partnership Firms:
- Partnership firms must pay a minimum alternate tax of 18.5% on their adjusted total income.
Tax Audit for Partnership Firms:
- Tax audits are mandatory for partnership firms with annual revenues exceeding Rs. 1 crore or gross receipts over Rs. 50 lakh in certain professions.
Due Date for Filing Partnership Firm Tax Return:
- The deadline for filing income taxes for partnership firms is July 31 of the assessment year.
- If a tax audit is required, the deadline is extended to September 30th.
ITR Form for Partnership Firm Return Filing:
- Partnership entities must file Form ITR 5 for income tax returns.
- No supporting documentation is required during filing, but it’s essential to maintain company records for presentation to tax authorities if requested.
LLP Tax Return Filing
Regardless of their income or loss, all limited liability partnerships must file an income tax return. LLPs are treated differently from their partners in terms of taxation and legal status. LLPs are subject to an income tax rate that is comparable to that of Indian corporations.
Requirement for Filing LLP Tax Return
- All limited liability partnerships (LLPs) must file income tax returns, irrespective of their financial status (profit or loss).
- LLPs are taxed differently from their partners and are considered separate legal entities for taxation purposes.
- LLPs are subject to income tax rates similar to those applicable to Indian corporations.
Income Tax Rate for LLPs
- LLPs registered in India pay income tax at a rate of 30% on their total income.
- If the total income exceeds Rs. 1 crore, there is an additional 12% surcharge imposed on the income tax amount.
- Additionally, LLPs are required to pay a health and education cess of 4% on top of the income tax and surcharge.
Minimum Alternate Tax for LLP
- LLPs, similar to corporations, are subject to the Minimum Alternate Tax (MAT).
- The MAT rate for LLPs is set at 18.5% of their adjusted total income.
- This ensures that the income tax liability of LLPs, after accounting for surcharges and cess, is not less than 18.5% of their total income.
Tax Audit for LLP
- LLPs with a turnover exceeding Rs. 40 lakh or a contribution over Rs. 25 lakh must undergo an audit conducted by a practicing Chartered Accountant.
- Additionally, LLPs engaged in international transactions with associated enterprises or specific domestic transactions must file Form 3CEB, certified by a Chartered Accountant.
- LLPs required to submit Form 3CEB must do so by November 30 as part of their tax filing obligations.
Due Date for Filing LLP Tax Return
- The deadline for LLP tax filing in India is July 31.
- However, for LLPs requiring a tax audit, the deadline to file income tax returns is September 30.
ITR Form for LLP Return Filing
- LLPs must use Form ITR 5 to file their income tax returns.
- When filing Form ITR 5 online, it’s necessary to use the digital signature of one of the LLP’s designated partners.
Company Tax Return Filing
- Every registered Indian company must submit an income tax return annually.
- Companies are categorized as domestic or overseas, based on their registration with the Ministry of Corporate Affairs.
- All Indian companies, including dormant ones, must file income tax returns each year, regardless of their financial activity.
- Domestic companies with turnover below Rs. 400 crores in 2020–21 are taxed at 25%, while those above are taxed at 30%. Additionally, a Health and Education Cess of 7% applies.
- If a company’s tax due is less than 15% of book profit, it must pay a minimum alternate tax of 15% of book profit plus surcharge and education cess.
- An annual audit of a company’s books by a chartered accountant is mandatory, regardless of its turnover or financial status.
- All Indian companies must file income tax returns by September 30 each year. Newly incorporated companies between January and March must also file returns by this deadline, without exemption.
- Companies operating for profit in India must use Form ITR 6 for filing income tax returns. This includes private limited companies, limited corporations, and one-person companies.
Key Points to Consider When Filing a Business Tax Return
- All businesses, regardless of profit or loss, need to assess their total income to determine if it exceeds the basic taxable threshold before deductions.
- If the gross total income surpasses Rs. 2.5 lakh, it signifies exceeding the basic taxable threshold. Income before deductions exceeding Rs. 3 lakhs is considered for business tax returns.
- LLPs, corporations, and other entities are obligated to file tax returns, irrespective of their financial performance or business activities, due to the uniform 30% tax rate.
How Filing Champs Can Assist with Business Tax Return Filings
- Filing Champs offers seamless assistance with business tax return filings, making it easy to navigate the complexities of the process.
- Their user-friendly website guides users through the filing process step-by-step, ensuring all tax obligations are met accurately and on time.
- With a team of experienced professionals, Filing Champs ensures precise submissions and compliance with tax laws.
- They help businesses select the appropriate ITR form, remind them of deadlines, and guide them through the filing process to minimize errors.
- Filing Champs simplifies business tax returns, saving time and reducing complexity for businesses of all types.
- To streamline your business taxes and file stress-free, reach out to Filing Champs today.
Business Tax Filing FAQs
For audited companies, the deadline is October 31, while those with international transactions must file by November 30.
It depends on the company type: ITR-4 for firms, ITR-5 for LLPs, ITR-6 for non-exempt companies, and ITR-7 for specified cases.
Consequences include penalties, interest charges, prosecution, director disqualification, and loss of eligibility for government contracts.
Sole proprietorship, partnership firm, LLP, and company tax return filing are the main types.
Yes, belated ITRs can be filed up to one year from the end of the relevant assessment year.
ITR-3 and ITR-4 (SUGAM) are applicable, along with various forms like Form 16A, Form 26AS, Form 3CB-CD, and Form 3CEB.
Businesses with a tax liability exceeding Rs. 10,000 in a financial year must pay advance tax.
Taxable business income is determined either through normal provisions or presumptive taxation, depending on the method chosen.
Small businesses with turnover or receipts up to Rs. 2 Crore can opt for Presumptive Taxation by offering a fixed percentage of their turnover as income.
Tax rates vary based on income slabs, with different rates for individuals, LLPs, and companies.
Self-employed individuals can calculate their tax by deducting expenses from earnings and filling out the appropriate tax return form.
Small businesses under the presumptive tax scheme file ITR-4, while those with turnover exceeding Rs. 2 Crores file ITR-3.
Surcharge rates range from 10% to 15%, with an additional Health and Education cess of 4% on business income tax.
Yes, all companies must file tax returns regardless of their business activities.
Tax audits are mandatory for businesses with turnovers above Rs. 1 crore and for professionals with turnovers exceeding Rs. 50 lakhs.
All eligible businesses must file tax returns, with a basic taxable limit of Rs. 2.5 lakhs for business income before deductions.
