Business Tax Returns

Business Tax Return Filing

Every business operating in India is expected to file an income or business tax return every financial year. In addition, the company is also required to file TDS return along with the business tax return and is expected to pay taxes in advance. 

The following bodies or individuals are expected to file business tax returns:

1. Proprietorship

   A sole proprietor earning business income along with his personal salary, a payment from house property and an interest income is required to state all his income in the same income tax return. 

2. Partnership Firm

   A partnership firm, whether registered or unregistered, needs to file an income tax return every year in Form ITR 5. The rate of 30% is determined as the income tax for a partnership firm. 

3. LLP (Limited Liability Partnership)

   Every registered Limited Liability Partnership (LLP) is required to file the business tax return with Form ITR 5 along with the MCA (Ministry of Corporate Affairs) annual return.

4. Company

   Every company registered in India under the Companies Act is expected to file its business tax return in Form INR 6 along with MCA annual return.

Tax Rates

The following tax rates are given for an individual (residential and non-residential), HUF (Hindu Undivided Family), AOP (Association of Persons), BOI (Body of Individual) and other artificial juridical persons:

Surcharge: A surcharge is applicable or levied on the amount of income if the said income exceeds a specified limit.

Partnership Firm

A partnership firm in the assessment year 2023-24 is taxable at 30%. The rate of income tax is subject to increase by 12% if the total income exceeds the limit of INR 1 crore. 

Domestic Company

Income tax rates for a domestic company for the Assessment Year (AY) 2023-24 and 2022-23 are given below:

Surcharge: The rate of 7% shall be levied if the total income exceeds INR 1 core but does not exceed INR 10 crores. The rate of 12% shall be applicable where the total amount of income exceeds INR 10 crores.

Special Tax Rate for a Domestic Company

Surcharge: If the company opted for section 115BAA or 115BAB of the Income Tax Act of 1961, the rate shall be 10% despite the total income of the company.

Income Tax Audit

Every taxpayer is required to get a tax audit done if the turnover of the business exceeds the amount of INR 1 crore. The tax audit is also needed to be accomplished if the turnover exceeds the amount of INR 50 lakh in case of professionals. The Chartered Accountant (CA) can be appointed for the tax audit of the account. 

Additionally, the tax audit is required if a business wishes to carry forward the loss of the previous year in the assessment year. The tax audit for business tax returns is also necessary if the profit is less than 8% of the total turnover of a business.

Presumptive Taxation

The presumptive taxation is covered under section 44AD of the Income Tax Act of 1961. A business with a turnover of up to INR 2 crores may opt to be taxed presumptively. The business is required to offer at least 8% of the total turnover as income under section 44AD for presumptive taxation. 

For professionals, 50% of the turnover is required to be held as a business tax return.

ITR Filing date for Business

Individuals not liable for tax audits are required to file their income tax returns on or before 31st August, post the end of the financial year. Late filing of ITR attracts a penalty. 

The ITR filing date for business for the individual or other assesses such as a partnership firm, company, or LLP liable to tax audit are required to file their ITR on or before 31st September. 

Penalty

It is crucial to remember the ITR filing date for business. An assessee who fails to file ITR may face penalties. A loss in the previous year cannot be carried forward in the next assessment year if the returns are filed post the due date as mentioned above. A fine of INR 5,000 is also subject to be levied on the assessee under section 271F of the Income Tax Act of 1961.

In Conclusion

Corporate houses or companies must file their business tax return before the due date. The TDS return must be filed along with the business tax return. The sole proprietorship, a private company, joint venture, public company, and limited liability partnership is liable to file business tax returns after every financial year.

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