BUSINESS INCOME TAX RETURN(ITR)

A business tax return is basically an income tax return. The return is a statement of income and expenditure of the business. Also, any tax to be paid on the profits made by you is declared in this return. The return also contains details of the assets and liabilities held by the business. Items like fixed assets, debtors and creditors of the business, loans taken, and loans given are declared here.

A business Income Tax Return is a simplified return form to be used by an assesses, at his/her option, if he/she is eligible to declare Profits and Gains from Business or Profession on presumptive basis under section 44AD, 44ADA or 44AE.

WHO HAS TO FILE A BUSINESS TAX RETURN?

Filing of returns mainly depends on the type of business structure. For example:

If you are a sole proprietor your business income and your other personal income like salary, income from house property, and interest income must be stated on the same return.
If your total income before deductions is above the basic taxable limit you need to compulsorily file your income tax return irrespective of profit or loss in your business.
The basic taxable limit is Rs. 2.5 lakh. So, if your income before deductions is above Rs. 2.5 lakh you need to file your business tax return.
For companies, firms, and Limited Liability Partnership (LLP) a business tax return must be filed irrespective of profit or loss. Even if there are no operations undertaken, a return must be filed.
Companies, firms, and LLPs are taxed at a rate of 30%.

THE REQUIREMENT FOR FILING BUSINESS TAX RETURNS

Filing business tax returns will depend on the kind of business you are whether a proprietorship, partnership firm, limited liability partnership, or private limited partnership.
If you fulfill certain conditions, you must maintain books of accounts.
If as a business, you meet any of the following criteria, then maintaining the books of accounts is mandatory.
Income is more the Rs. 1,20,000; or – Total sales, turnover or gross receipts are more than Rs. 10,00,000.

DOCUMENTS REQUIRED FOR BUSINESS ITR FILING

PAN cards copy for individual/business or related information.
Aadhaar card.
E-mail ID & Mobile Number.
Bank Account Number & IFSC Code.
Bank Statement
Business or Profession Details.
Business Expenses, Business Loan, and Books of Accounts (if available).
Investments, Sales, and Purchase Details.
Any other income, Investments, or Savings details.
Form 26AS or Income Tax Login Credentials.

Which ITR should a company file?

Form ITR-4

This ITR can be used to File ITR for those firms other than LLPs, which have a total income of up to ?50 lakhs, and that income is calculated under Sections 44AD, 44ADA, 44AE.

File ITR-6

Those companies not claiming exemption under Section 11 can use ITR-6 to file an Income tax return.

Form ITR-5

This ITR can be used for filing ITR for LLPs and partnerships, not ITR 7.

File ITR-7

This can be used for those companies that are mandated to file returns from Sections 139(4A), 139(4B), 139(4C), and 139(4D) only.

What happens if a company does not file ITR?

If a company fails to file its Income Tax Return (ITR), it may face the following consequences:

Penalty

: The company may be levied with a penalty for non-filing of ITR; as per section 234F of the IT Act, a fine of Rs.10,000 will be charged for failing to file tax returns.

Prosecution

In severe cases, the company may be prosecuted for non-compliance, leading to the imprisonment of up to 7 years and/or fines.

Interest

In addition to the penalty, the company may also be charged. with interest on the outstanding tax amount. Moreover, a delay in ITR filing can result in interest being charged under Section 234A of the Income Tax Act 196.