Income Tax Return for Businesses

Income Tax Return has to be mandatorily be filed by the following entities: -

  • Companies
  • Firms
  • Limited Liability Partnerships (LLP)
  • Charitable Trusts claiming exemptions u/s 11 & 12.
  • Co-operative Societies
  • Political Parties
  • Business Trusts
  • Associations, Institutes, Hospitals

Types of Income Tax Returns

Income Tax Return may be filed by an individual being involved in a business or profession in form itr 3 & itr 4.
The criteria these forms are as follows: -

ITR-3: Individuals and HUFs having income from profits and gains of business or profession

ITR-4: Individuals, HUFs and Firms (not being an LLP) being a Resident having Total Income upto 50 Lakhs and having from Business and Profession which is computed under sections 44AD, 44ADA or 44AE. The individuals should not be a Director or should not be holding equity shares in an unlisted company.

ITR-5: A Partnership firm / LLP or an Association of Persons needs to file itr return in form.

ITR-6: A company has to file itr return in form.

ITR-7: A Charitable Trust / University / Hospital / Political Party etc. has to file itr in form.

Individuals involved in business or profession are required to maintain proper books of accounts. Even if books of accounts are not mandatory for certain categories of individuals, it is always advisable to maintain proper set of books.
For companies, charitable trusts etc. books of accounts are to be properly maintained and audited.

Video on file Income Tax Return Online FY 2019-20

  • How to file Income Tax Return 2020
  • Deadline to File Income Tax Return (ITR)
  • ITR filing eligibility
  • Who is required to file Income Tax Returns?

The due date for filing return for an individual and partnership firms for the Assessment Year 2020-21 will be 31st July, 2020. But the due date will be 30th September, 2020 in the following cases: -

• Where the books of accounts of the taxpayer are required to be audited under the Income Tax Act or under any other law.
• Where the individual is a working partner of a firm whose accounts are required to be audited under the Income Tax Act or under any other law.

For Companies the due date is 30th September, 2020. Companies which are engaged in transactions with branches / HO located in a foreign country, the due date is 30th November, 2020.
For Charitable Trusts required to get their accounts audited, the due date 30th September, 2020.

 

You may still file your return on or before the end of the Assessment Year. Belated Return is however subjected to interest and penalty.

Due to coronavirus issue, the government has extended the deadline of filing ITR for FY 2018-19 from 31st March 2020 to 30th June 2020.

Where ITR is filed after the due date of filing return, late fee is levied as follows:-

Where total income does not exceed Rs. 5,00,000 Rs. 1,000
Where total income exceeds Rs. 5,00,000 and return is filed on or before 31st December of the Assessment Year Rs. 5,000
Where total income exceeds Rs. 5,00,000 and return is filed between 1st January to 31st March of the Assessment Year Rs. 10,000

Apart from the above, interest shall also be charged on the outstanding tax amount (if any) at the rate of 1% per month or part of the month (simple interest) from the relevant due date till the date of actual filing.

Income Tax Return must be filed latest by 31st March, 2021 along with payment of applicable late fee. Return cannot be filed after 31st March of the Assessment Year unless the delay is condoned by the Assessing Officer / Commissioned of Income Tax / Chief CIT / CBDT depending on the circumstances.

If an individual or a company or any other entity who is mandatorily required to file return fails to file return, the consequences may be severe. Apart from interest and penalty mentioned above, the assessee may be subjected to Best Judgement Assessment. Further, penalty for concealment of income may be levied and prosecution may be initiated. Several kinds of losses are not allowed to be carried forward where return is not filed on or before due date.

Yes. Any person who is not mandatorily required to file return of income may file such return voluntarily.

For the Assessment Year 2020-21 due date is as follows: -

Where the total turnover or the gross receipts in Previous Year 2017-18 does not exceed Rs. 400 crores 25% of the total income or MAT, whichever is higher
Others 30% of the total income or MAT, whichever is higher

Minimum Alternate Tax (MAT) is calculated at 15% of book profits.

Surcharge is applicable at the rate of 7% on companies having income in excess of Rs. 1 crore but not exceeding Rs. 10 crores. Surcharge of 12% is levied on companies having income exceeding Rs. 10 crores.

Cess of 4% is applicable over and above normal tax and surcharge.

A sole-proprietorship business does not have a separate identity for Income Tax purposes. Profits of such business will be taxed in the hands of the owner as per applicable slab rates as mentioned above.

The tax rate for a foreign company is 40%. Surcharge shall be levied at the rate of 2% where total income exceeds Rs. 1 crore but does not exceed Rs. 10 crores. Surcharge of 5% is levied where total income exceeds Rs. 10 crores. Cess will be applicable at the rate of 4%. Tax rate is however subject to Minimum Alternate Tax.

The tax rate of a firm is 30%. This will be increased by a surcharge of 12% if total income exceeds Rs. 1 crore. Cess will be applicable at the rate of 4%.

Minimum Alternate Tax (MAT) is the minimum rate of tax that a company is required to pay. Currently the rate of MAT is 15% (with some exceptions). Where the normal tax calculated at 25% / 30% (whichever applicable depending on turnover of FY 2017-18) is more than MAT, then such normal tax will apply. However where MAT is higher than normal tax, MAT will apply.

Minimum Alternate Tax (MAT) is different from Alternate Minimum Tax (AMT). MAT is applicable on companies whereas AMT is applicable on non-companies including individuals. The rate is AMT is 18.5%. it is calculated on adjusted total income. Conceptually AMT is similar to MAT as it is the minimum tax payable by non-companies. AMT is not payable by individuals/ HUF/ AOP/ BOI if adjusted total income does not exceed Rs. 20 lakhs.

Resident Welfare Associations (RWA) are generally registered as Association of Persons (AOP). Provisions of AOP are applicable on RWA to determine taxability and requirement of filing return. The concept of mutuality also arises as contributions received from members are not taxable in the hands of the RWA. The RWA is required to file ITR-5.

Where the RWA is registered as a non-profit seeking company under the Companies Act, it is mandatorily required to file return in form ITR-6.

 

Return is to be filed if total income in a year exceeds maximum amount not chargeable to tax applicable to individuals. If income exceeds such maximum amount, return is to be filed in form ITR-3.

Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or authorised representative or film artist or profession of Company Secretary or profession of Information Technology are required to maintain books of accounts.

Books are required to be maintained only if total gross receipts exceed Rs. 1,50,000 in any one of the three immediately preceding years.

ITR-3 will be applicable if an individual has income from business. Other heads of income can also be disclosed in the same form.

Yes. The original return can be revised on or before the end of the Assessment Year. Therefore, Original Return relating to FY 2019-20 can be revised any time on or before 31st March, 2021.

Yes. There is no limit in the number of times a return can be revised. However no revision shall be allowed after 31st March of the Assessment Year.

As soon as a return is uploaded, an acknowledgement is generated. Where the return is digitally signed / e-verifed, no further verification is necessary. The assessee is advised to keep a copy of the acknowledgement for future reference. The soft copy of the acknowledgement and the Income Tax Return can always be downloaded from the Income Tax Portal.

Where the return is digitally signed, no verification is necessary. Return may be e-verified through Aadhaar / EVC. Where e-verification could not be done, the assessee needs to take a print out of the acknowledgement, duly sign it and send to Centralized Processing Centre, Income Tax Department, Bengaluru-560500 by Ordinary Post or Speed Post within 120 days from the date of submission of return.

Where verification is not done, the return shall be declared as void on expiry of 120 days from the date of filing.

What's included

For Partnership Firms, LLPs, Private Limited Companies, Association of Persons, Body of Individuals, Societies which have Annual turnover less than 20 Lakhs

  • Tax Planning & Advice
  • Tax Computation
  • ITR Filing

Documents Required

  • PAN
  • Profit & Loss A/c, Balance Sheet of Current Financial Year and Preceding Financial Year (if available)
  • Bank Statements
  • Interest Certificate from Bank
  • Any Other document / information as may be required

Income Tax for Businesses


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