Filing your business tax return in India can seem complicated, especially with various ITR forms available. This guide simplifies the process by explaining business ITR (Income Tax Return) forms and helping you choose the right one for your company.
Understanding ITR Types for Businesses in India
India’s ITD (Income Tax Department) uses different ITR forms for various taxpayer categories. Businesses typically file under two main categories:
● ITR for company: This applies to regular companies, including private limited companies.
● ITR for business income: This applies to proprietorships or partnership firms.
Types of ITR Forms
ITR forms report your business income to the Indian Income Tax Department.
Here’s a breakdown of common ITR forms for businesses:
● ITR-3: This form is for businesses or professions that maintain detailed accounts and may be required to get them audited. Individuals with income from a proprietary business or profession also use it.
● ITR-4 (Sugam): This simplified form is for businesses and professions with a turnover below ₹2 crore opting for the presumptive taxation scheme under Section 44AD. It can also be used by freelancers in specified professions with a turnover below ₹75 lakh under Section 44ADA.
● ITR-5: This form applies to LLPs (Limited Liability Partnerships), partnerships, Association of Persons (AOPs), and Body of Individuals (BOIs) filing returns for income from business or profession and other sources.
● ITR-6: This is the ITR form a company has to use. This ITR for companies applies to private limited companies (including one-person companies or OPCs) that don’t claim exemptions under Section 11 of the Income Tax Act.
● ITR-7: This form is for specific entities required to file returns under Sections 139(4A) to 139(4F) of the Income Tax Act. These typically include trusts, charitable institutions, and political parties.
Remember: ITR filing can be complex. If you’re unsure which form to choose, consult tax consultant near you for personalized guidance.
How to Choose the Right ITR Form for Your Business
Choosing the correct ITR form depends on your company’s structure and tax situation.
Here’s a quick guide:
Private Limited Company
If your company is a private limited, you’ll likely file ITR-6.
Business with Audited Accounts
If your business maintains audited accounts or opts out of presumptive taxation, you’ll need ITR-3.
Business Under Presumptive Taxation
If your business qualifies for and utilizes a presumptive taxation scheme (like Section 44ADA), you
can file ITR-4 (Sugam).
LLP or Partnership Firm
LLPs and partnership firms typically file ITR-5.
Tip: The ITD website provides a helpful tool for determining the appropriate ITR form based on your
situation.
FAQs on ITR
What documents do I need to file a business tax return?
The documents required will vary depending on your chosen ITR form. However, standard documents include the following:
● Company’s PAN card
● Profit and loss statement
● Balance sheet
● Tax challans for advance tax payments
● Details of any investments or deductions claimed
Can I file my business tax return or corporate tax return online?
Yes, there is no offline filing of income tax return for business or for company offline. Everything is faceless online. Filing ITRs electronically is mandatory for companies using ITR-6.
What is the due date for filing a business ITR?
The due date for filing your business ITR depends on the form you choose and also on a fact if you fall under the audit or not.
● ITR-3, 5, 6: October 31st of the assessment year (AY)
● ITR-4 (Sugam): November 30th of the AY
● For all businesses (including company, firm): July 31st of the assessment year (AY)
What are the penalties for late filing of business ITR?
As per the Income Tax Act, late filing of ITR attracts a penalty. You will be attracted with penalty of INR 5000 maximum for late filing, in cases where there is no tax liability then penalty gets reduced to 1000. Other than penalty, the late filing of corporate tax return or company tax return may have bad effects on your stakeholders. A well-run business shall always complete compliance timely rather than making delays.
What are the penalties for filing the wrong ITR form?
While there’s no direct penalty for filing the wrong ITR form, it can delay processing your return and potential tax assessments if discrepancies arise. Filing the correct form ensures a smoother process and avoids complications.
My company is a startup. Which ITR form should I use?
If your startup is a private limited company or a regular company, you’ll likely use ITR-6. However, if you’re a proprietor or partnership opting for the presumptive taxation scheme under Section 44AD, you might be eligible for ITR-4 (Sugam). Consult a tax advisor to confirm based on your specific circumstances.
Can I switch to a different ITR form in the next filing year?
Yes, you can choose the appropriate ITR form each year based on your company’s income, the nature of your business, and any changes in tax regulations.
Can I file an income tax return myself?
Well, you can find a lot of content online that might be useful for ITR do it yourself however it is always a good idea to have a tax consultant to feel secure. Especially if you have other than salary income, you should find a guide who is a CA who not only helps you file income tax return but make sure you plan your taxes well in advance and helps you with financial advisory services too. If you are trying to find a tax consultant as a businessperson or an entity, you must talk to our tax expert CA Reetu.
Where all does Tax Vic provides services such as corporate tax returns, business tax returns?
Tax Vic is a company having its office in Delhi and Noida. However, tax filing services is being provided in several cities such as Bangalore, Mumbai, Pune, Patna, Hyderabad, Chennai and so on.
Filing your business ITR accurately and on time is crucial to avoid penalties and ensure compliance with tax regulations. If you’re unsure about the process or require assistance choosing the correct ITR form, consider consulting a qualified tax advisor or chartered accountant.