Business Tax Return Filing - Types, Due Dates & More

As a business owner in India, understanding business tax return filing is crucial. Tax filing helps to build up the credibility of the business. Every business running in India is required to file its tax returns. However, the taxation system involves certain complexities, and this blog helps you understand them. 

Here, we will cover business taxation: who should file a business tax return, the types of returns, presumptive taxation, due dates, and more. 

What is a Business Tax Return?

As the name implies, a business tax return is an Income Tax Return filed for the business. The return contains details of the business's income and expenditure, any taxes payable on its profits, and all details of its assets and liabilities. Additionally, items such as the business's assets, debtors and creditors, and loans granted and taken are declared here. 

Who Can File A Business Tax Return

Filing of the business return generally depends on the type of business structure. For instance:

If you are a sole proprietor, you need to report business income, and your other personal income, such as salary, income from interest, and house property income, in the return. 

If your earned income before the deduction is above the basic taxable limit, you have to file your income tax return, regardless of the profit or loss in your business. 

The basic taxable limit is Rs 2.5 lakh (Old Tax Regime) and Rs 3 Lakhs (New Tax Regime). Hence, if your total income before any deductions is above it, you have to file your business tax return. 

For a limited liability partnership (LLP), firms and companies must file a business tax return regardless of loss or profit. It must also be filed even when no operations are undertaken. 

All companies, LLPs, and firms are taxed up to 30%. 

What Are The Types Of Business Tax Return Filing

The types of business tax return filings depend on the business entity filing them. Such as:

Sole Proprietorship Tax Return Filing: Under this business structure, a single owner who operates the entire business files the business's income tax return annually. The firm is the same as the proprietor; hence, the filing process is the same as for an individual return. 

Partnership Tax Return Filing: A partnership is a business that is formed under a partnership agreement and operated by two or more partners. Such firms are taxed as separate legal entities and are required to file business tax returns regardless of their profit or loss. 

Limited Liability Partnership Tax Return Filing: An LLP, or limited liability partnership, is a business structure that provides the benefits of limited liability and the flexibility of a partnership. In this type of business structure, the owners of the firms get the untaxed profits, and the taxes are payable by individuals.

LLCs and LLPs are usually preferred over a regular corporation because they avoid double taxation. This is because, under the regular corporation, both the company and the shareholders are taxed on the contributions. 

Company Tax Return Filing: There are two types of business tax return filing: domestic and foreign companies. Private limited companies and OPCs (One Person Companies) registered with the Ministry of Corporate Affairs (MCA) and classified as domestic companies. A foreign LLC is a company formed in one state and executing its business in another state. 

The Income Tax Audit

The income tax audit is for the following individuals and businesses. 

1) Businesses whose total sales, turnover, or gross receipts for the business exceed Rs 1 crore in the last year. From AY 2021-22, the 1 crore limit has been increased to 5 crores, and from AY 2022-23, the limit is 10 crores. Along with this, the business:

• Cash receipts are below 5% of the turnover or the gross receipts. 
• Cash Payment is below 5% on the aggregate payment. 

2) A professional whose total gross receipts from the profession are more than Rs 50 lakh in the previous year. 

In addition, a tax audit is required if the business has incurred a loss, and you want to carry it forward. The audit is furthermore necessary for individuals carrying on a business that is eligible for presumptive taxation under section 44AD, 44AE, or 44BBB and who claim the income below the presumptive taxation limit. 

The Presumptive Taxation

Firms, Hindu Undivided Families (HUFs), and individuals running a business or offering services can report their income for tax purposes on a presumptive basis. Presumptive taxation is permitted up to a turnover of 2 Crore for normal and 3 Crore if cash < 5% for business, and for professionals, it is Rs 50 lakh. 

Furthermore, for businesses, a minimum of 8%, and for professionals, 50% of their professional receipts are subject to presumptive taxation. 

What Is The Due Date For Filing Business Tax Return

The following are the business tax return filing due dates. 

Please note that if the business tax return is not filed by the due date, any loss incurred during the relevant year cannot be carried forward. 

In addition, a fine of Rs 5000 under Section 234F will be imposed. 

The Bottom Line

Filing your business's ITR is essential for staying compliant, avoiding penalties, and maintaining a strong financial record. Company owners must ensure their business income tax returns are filed by the due date, because any losses incurred during the year cannot be carried forward to offset future income if the returns are filed after the due date. 

As an NRI, if you are seeking expert guidance in India to file your business income tax return, Savetaxs is the name to trust. Our experts will help NRIs navigate the complexities of Indian tax laws across borders, especially when they have business interests.

The experts ensure NRIs receive professional assistance with tax compliance and advisory services. Savetaxs experts are proficient in the Income Tax Act, 1961, and the FEMA regulatory framework, providing NRIs with the best tax-filing approach. 

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