Setting up a business and understanding tax filing is crucial for smooth operations. Filing business tax returns is necessary for companies to report earnings and expenses accurately. At Vyapaar Registration, we make business tax filing simple and stress-free. With our expert, we ensure you never miss filing deadlines or break any rules. Whether you're just starting or already have an established business, we’re here to assist you at every step. Let Vyapaar Registration simplify your business tax returns and help you meet your tax obligations without hassle.
A business tax return is an income tax return that companies need to file every year. It provides a detailed report of a business's income, expenses, and tax information, including Tax Deducted at Source (TDS). This return also includes financial details like fixed assets, loans, debtors, and creditors. Filing it on time is essential to stay compliant with tax regulations.
| Reason for Filing Business Income Tax Return | Description |
|---|---|
| Refund Claims | Filing returns on time can lead to potential refunds, improving your business's cash flow. |
| Carry Forward of Losses | Losses incurred in one financial year can be carried forward and adjusted against future profits, reducing tax liabilities. |
| Loan Approvals | Proper and up-to-date returns increase the chances of securing loans by providing evidence of financial stability. |
| Legal Proof | Filed ITRs act as official proof of financial activities, which can be useful for legal or contractual purposes. |
| Tax Compliance | Timely and accurate filing ensures compliance with tax regulations and avoids penalties or legal issues. |
| Transparency | Filing tax returns promotes transparency and builds trust with customers, partners, and stakeholders. |
| Audit Preparedness | Accurate financial statements filed with ITRs help businesses prepare for potential tax audits. |
| Supporting Business Growth | Clear and accurate records help businesses make informed decisions, aiding growth and expansion strategies. |
| Avoiding Tax Notices | Timely and accurate filing reduces the likelihood of receiving notices or queries from tax authorities. |
| Maximizing Tax Benefits | Filing on time allows businesses to avail themselves of various tax deductions and benefits legally, optimizing their tax liabilities. |
An individual with business income is considered to be operating a proprietorship firm in India. The tax return filing process for proprietorships is similar to individual income tax returns.
Requirement for Filing Proprietorship Tax Return:
1. Proprietors below 60 years: File if income exceeds Rs. 2.5 lakhs.
2. Proprietors between 60-80 years: File if income exceeds Rs. 3 lakhs.
3. Proprietors above 80 years: File if income exceeds Rs. 5 lakhs.
| Income Range | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 to ₹7,00,000 | 5% |
| ₹7,00,001 to ₹10,00,000 | 10% |
| ₹10,00,001 to ₹12,00,000 | 15% |
| ₹12,00,001 to ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Note: The above rates apply to individuals below 60 years of age. For senior citizens (60 years and above but below 80 years), the income up to ₹5,00,000 is exempt from tax.
| Proprietor's Age | Income Range | Income Tax Rate |
|---|---|---|
| Proprietor below 60 years | Up to Rs. 2.5 lakh | No Tax |
| Rs. 2.5 lakh to Rs. 5 lakh | 5% | |
| Rs. 5 lakh to Rs. 10 lakh | 20% | |
| Above Rs. 10 lakh | 30% | |
| Proprietor between 60-80 years | Up to Rs. 3 lakh | No Tax |
| Rs. 3 lakh to Rs. 5 lakh | 5% | |
| Rs. 5 lakh to Rs. 10 lakh | 20% | |
| Above Rs. 10 lakh | 30% | |
| Proprietor above 80 years | Up to Rs. 5 lakh | No Tax |
| Rs. 5 lakh to Rs. 10 lakh | 20% | |
| Above Rs. 10 lakh | 30% |
Note: The old tax regime allows taxpayers to claim deductions and exemptions, which can reduce the taxable income.
| Income Range | Surcharge Rate (Default Scheme - 115BAC) | Surcharge Rate (Old Scheme - Alternative) |
|---|---|---|
| ₹50,00,000 to ₹1 crore | 10% | 10% |
| ₹1 crore to ₹2 crore | 15% | 15% |
| ₹2 crore to ₹5 crore | 25% | 25% |
| Above ₹5 crore | 25% | 37% |
All partnership firms must file income tax returns annually, whether they made a profit or a loss. Even if there was no business activity, a NIL return must be filed.
o Partnership firms are taxed at 30% of total income.
o Surcharge: If income exceeds ₹1 crore, a surcharge of 12% applies on the tax.
o Cess: A 4% Health and Education Cess is applied on the tax and surcharge.
Partnership firms must pay 18.5% MAT on adjusted income, which can be increased by surcharge and cess.
o Firms with annual sales over ₹1 crore need a tax audit.
o Firms with gross receipts over ₹50 lakhs (in a profession) also need a tax audit.
o July 31 for firms not requiring an audit.
o September 30 for firms requiring an audit.
Partnership firms must file ITR 5, which doesn’t require attaching documents but all business
records should be kept for reference.
All LLPs must file income tax returns annually, regardless of income or loss. Even if there’s no business activity, a NIL return must be filed.
o LLPs are taxed at 30% of total income.
o Surcharge: A 12% surcharge applies if income exceeds ₹1 crore.
o Cess: A 4% Health and Education Cess is added on tax and surcharge.
LLPs are subject to 18.5% MAT on adjusted income, which is increased by surcharge and cess.
o LLPs with turnover above ₹40 lakh or contribution over ₹25 lakh must get their accounts audited.
o LLPs involved in international transactions or specified domestic transactions must file Form 3CEB, certified by a
Chartered Accountant. The deadline for this is November 30.
o July 31 for LLPs not requiring an audit.
o September 30 for LLPs requiring an audit.
LLPs must file ITR 5 online using the digital signature of one of the designated partners.
All companies in India, including dormant ones, must file income tax returns annually, regardless of income, profit, or loss.
o 25% for domestic companies with a turnover of less than ₹400 crores (2020-21).
o 30% for companies with a turnover over ₹400 crores (2020-21).
o Surcharge: 7% on income tax and surcharge.
o Cess: Health and Education Cess at 4%.
Companies must pay a 15% MAT on book profits if their tax liability is
less than 15% of book profits, plus surcharge and cess.
All companies must have their accounts audited by a Chartered Accountant every year, regardless
of turnover or profit.
o September 30 for all companies.
o Companies incorporated between January and March must still file by September 30 in the same calendar year.
Companies must file ITR 6 for business income tax returns.
| Section | Document Requirements |
|---|---|
| Basic Documents | - PAN Card of the Proprietor |
| Financial Records | - Bank Statements for the Financial Year |
| - Profit and Loss Account | |
| - Balance Sheet | |
| Income & Expense Details | - Income and Expenses Details |
| Tax Documents | - Income Tax Returns of the previous years |
| - GST Returns (if applicable) | |
| - TDS Certificates (if applicable) |
| Section | Document Requirements |
|---|---|
| Basic Documents | - PAN Card of the Firm |
| - Partnership Deed | |
| Financial Records | - Bank Statements for the Financial Year |
| - Profit and Loss Account | |
| - Balance Sheet | |
| Income & Expense Details | - Income and Expenses Details |
| Tax Documents | - Income Tax Returns of the previous years |
| - GST Returns (if applicable) | |
| - TDS Certificates (if applicable) |
| Section | Document Requirements |
|---|---|
| Basic Documents | - PAN Card of the LLP |
| - LLP Agreement (if applicable) | |
| Financial Records | - Bank Statements for the Financial Year |
| - Profit and Loss Account | |
| - Balance Sheet | |
| Income & Expense Details | - Income and Expenses Details |
| Tax Documents | - Income Tax Returns of the previous years |
| - GST Returns (if applicable) | |
| - TDS Certificates (if applicable) |
| Section | Document Requirements |
|---|---|
| Basic Documents | - PAN Card of the Company |
| - Certificate of Incorporation | |
| - Articles of Association (AoA) and Memorandum of Association (MoA) | |
| Financial Records | - Bank Statements for the Financial Year |
| - Profit and Loss Account | |
| - Balance Sheet | |
| Income & Expense Details | - Income and Expenses Details |
| Tax Documents | - Income Tax Returns of the previous years |
| - GST Returns (if applicable) | |
| - TDS Certificates (if applicable) | |
| Compliance & Auditing | - Auditor's Report (for Companies with audit requirements) |
| - Financial Statements for the Year (Annual Reports) | |
| Board Approval | - Board Resolution for Income Tax Filing (if applicable) |
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