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Overview

Starting a business and knowing how to deal with taxes is important for running a business. A business tax return is like a report card for companies. It shows all the money a business made and all the costs it had.

What is Business Tax Return Filing?

A business tax return is an income tax report for businesses. It shows the money a business earns and spends. It also mentions any taxes to be paid on the profits. The return includes information about the assets and debts of the business, such as things the business owns, money it's owed, and money it owes to others.

Benefit

Filing income tax returns has several advantages for businesses, such as:

Refund Claims: Timely filing can lead to potential refunds, improving cash flow.

Carry-forward of Losses: Losses in one year can be used to reduce taxes in future profitable years.

Loan Applications: It helps show financial stability, increasing the chances of getting loans.

Evidence for Transactions: Tax returns prove financial activities, are useful for legal purposes.

Compliance with Law: Ensures following tax rules, avoiding penalties.

Transparency: Builds trust with customers, partners, and stakeholders.

Audit Preparedness: Helps in accurate financial reporting and prepares for tax audits.

Business Growth: Informed decisions are easier with accurate financial data.

Avoiding Notices: Reduces the chance of receiving tax-related notices.

Tax Benefits: Enables businesses to legally benefit from tax deductions and optimizations.

Who needs to submit a business tax return?

The requirement to file a return depends on the type of business:

Sole Proprietors: If you run a business by yourself, you include your business income along with your personal income, like salary or rental income, in the same tax return.

Income Above the Basic Limit: If your total income before deductions goes beyond the basic taxable limit, which is Rs. 2.5 lakhs, you must file an income tax return, regardless of whether your business made a profit or not.

Companies, Firms, and LLPs: These entities must file a business tax return, even if they didn't make a profit or conduct any operations. The tax rate for companies, firms, and LLPs is 30%.

Tax & Process

For LLPs

The LLP's ITR 5 form can be filed with the Income Tax Department using both online and offline methods:

Offline Filing Process:

You can file the form offline by submitting a printed or bar-coded return.

Include the acknowledgment slip provided with the return form when filing on paper.

Online Filing Process:

File ITR 5 online by sending it electronically with a digital signature or by submitting the data electronically and verifying it with Income Tax Return Form ITR-5.

Print two copies of the ITR-5 Form when filing online.

Send one signed copy to Post Bag No. 1, Electronic City Office, Bengaluru-560500 (Karnataka).

Keep the other copy for your records.

Companies subject to audit under section 44AB must file ITR 5 electronically with a digital signature.

Filing ITR Online for Individuals with Business Income:

To file ITR-4 online, follow these steps:

Step 1: Visit the official Income Tax e-filing portal.

Step 2: Log in using your PAN, password, and the Captcha code.

Step 3: Under the "e-file" menu, select "Income Tax Return."

Step 4: The PAN will be automatically filled; enter the Assessment year, ITR Form Number, Filing type (Original/Revised Return), and Submission mode (Prepare and Submit Online).

Step 5: Click "Continue."

Step 6: Read the instructions, fill out the ITR-4 form, and save it as a draft by clicking "Save Draft" periodically.

Step 7: Choose a verification method.

Step 8: Click "Preview and Submit."

Step 9: Verify the entered data.

Step 10: Submit the ITR. Once verified, you can access your ITR file through your account.

Use these steps to file ITR for individuals and self-employed persons online.

Offline Filing for Small Proprietorship Business:

To file offline, download the ITR utility from the income tax website and follow these steps:

Step 1: Visit the income tax filing website.

Step 2: Go to "Downloads" and select "IT Return Preparation Software."

Step 3: Download the utility ZIP file and open it.

Step 4: Fill in the required fields for the selected ITR form.

Step 5: Validate each section and calculate the tax.

Step 6: Generate and save the XML file.

Step 7: Log in to your account with your PAN, password, and Captcha code, then select "e-file."

Step 8: Choose "Income Tax Return."

Step 9: Select the Assessment year, ITR Form Number, Filing type (Original/Revised Return), and submission mode (Upload XML).

Step 10: Pick a verification method.

Step 11: Click "Continue."

Step 12: Attach the ITR XML file and submit it.

Step 13: You can later view the uploaded file.

Documents Required

For business owners, self-employed individuals, and companies, the essential documents required to file an ITR include:

• PAN card
• Aadhaar card
• Loan documents (if seeking a rebate)
• A balance sheet for the financial year
• Audit records (if applicable)
• Certificates reflecting tax deductions at the source (TDS)

Challan copies of income tax payments, including advance tax and self-assessment tax.

Procedure

FAQ's