ITR filing is indeed a complicated process. Before you set out to file an Income Tax Return, there are a lot of aspects like tax brackets and certain rules to be aware of. Let’s try to understand how to file an ITR for your business one by one.
But first, what is Income Tax Return (ITR)? ITR is a form that is used to file information about the income and taxes payable during that year. There are 7 ITR forms that can be filed by the corresponding organization or the person.
The Income Tax Act has classified the types of taxpayers into different categories to apply different tax rates for different types of taxpayers. They are Individuals, Hindu Undivided Family, Body of Individuals, Firms, Association of Persons and Companies.
DIFFERENT ITRs FOR BUSINESSES
Filing an ITR for business involves filing different ITR forms. The following are the categories:
- ITR-4 for those firms other than Limited Liability Partnership (LLPs), which have a total income not exceeding Rs. 50,000 lakhs
- ITR-5 for LLPs, Investment funds, Business trusts, Estate of insolvent, Estate of deceased, Artificial Juridical Person (AJP), Body of Individuals (BOIs).
- ITR-6 for those companies that do not claim an exemption under Section 11. This section provides an exemption for income derived from property held under trust wholly for religious or charitable purposes. This exemption is subject to certain conditions.
- ITR-7 for companies that are mandated to file returns from Section 139 (4A), 139(4B), 139(4C), 139(4D) only.
ITR FOR SMALL BUSINESS
Small businesses need to file ITR 4 if they have opted for a presumptive tax scheme. However, if the turnover exceeds Rs. 2 crores, then ITR 3 should be filed.
DOCUMENTS REQUIRED TO FILE AN ITR
- Pan Card
- Aadhar Card
- Loan documents to claim a rebate
- A balance sheet of the financial year
- Records of audit if applicable
- Certificates of the tax deduction on the source
- Challan copy of income tax payment (advance tax, self-assessment tax)
Also Read: What are the documents required for filing an ITR by first-time filers, salaried people, and an individual?
TAX RATES APPLICABLE TO THE COMPANY FOR AY 2023-2024
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DOMESTIC COMPANY
| Domestic Company | Tax Rate |
| Turnover or Gross Receipt in the previous year 2020-21 not exceeding ₹ 400 crores | 25% |
| When it opted for Section 115BA | 25% |
| When it opted for Section 115BAA | 22% |
| When it opted for Section 115BAB | 15% |
| Any other domestic company | 30% |
Surcharge:
The amount of income tax shall be increased by a surcharge at the specified rate percentage of such tax:
| Range of Income | Rs. 1 Crore to Rs.10 Crore | Above Rs. 10 Crore | If a company opts for taxability u/s 115BAA or section 115BAB |
| Surcharge Rate | 7% | 12% | 10% |
The surcharge shall be subject to marginal relief.
Marginal Relief is given to those whose taxable income is beyond the threshold limit after which a surcharge is payable, but the net income above the threshold is less than the surcharge.
Additional Health and Educational cess at the rate of 4% shall be added to the income tax liability in all cases.
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FOREIGN COMPANY
| Nature of Income | Tax Rate |
| Royalty received from the Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964, but before April 1, 1976, and where such agreement has, in either case, been approved by the Central Government | 50% |
| Any other income | 40% |
Surcharge:
The amount of income tax shall be increased by a surcharge at the specified rate percentage of such tax:
| Range of Income | Rs. 1 Crore to Rs.10 Crore | Above Rs. 10 Crore |
| Surcharge Rate | 2% | 5% |
The surcharge shall be subject to marginal relief.
Additional Health and Educational cess at the rate of 4% shall be added to the income tax liability in all cases.
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PARTNERSHIP FIRM OR LLP
Partnership firm (including LLP) is taxable at 30%
Surcharge:
The amount of income tax shall be increased by a surcharge at the rate of 12% if the income exceeds one crore rupees.
STEP-BY-STEP GUIDE ON E-FILING ITR
Step 1: Visit the income tax filing website https://www.incometax.gov.in/iec/foportal/
Step 2: Log in to the e-filing portal by entering your user ID (PAN), Password, and Captcha Code and selecting ‘Login’.
Step 3: Click on the ‘e-file’ menu
Step 4: Select the ‘Income Tax Return’ link.
Step 5: On the income tax return page, choose
- Assessment Year
- ITR Form Number
- Filing type as ‘Original/Revised Return’
- Choose Submission mode as “Prepare & Submit Online”
Step 6: Click on ‘Continue’
Step 7: Read the instructions carefully and fill in the mandatory fields of the ITR form
Step 8: Choose a verification method among the available options
- I would like to e-Verify
- I would like to e-Verify later within 120 days from the date of filing
- I don’t want to e-Verify and would like to send a signed ITR through normal or speed post to “address” within 120 days from the date of filing
Step 9: Select the‘ Preview & Submit’ button. Carefully verify all the data entered in the ITR form.
Step 10: Submit the ITR
Step 11: You can later view the file.
WHAT HAPPENS WHEN TAXES ARE PAID AFTER THE DUE DATE?
An ITR filed after the due date attracts a late fee and is known as a ‘belated return.’ The due date for filing an income tax return (ITR) for AY 2023–24 is July 31, 2023.
Although there are no legal implications involved with filing late returns, the entire process comes with a hefty late fee.
Those who file their ITR after the due date lose out on important tax benefits. Anyone who files an ITR after the due date pays a late fee of Rs. 5,000 if taxable income is above Rs. 5,00,000. Those with less than Rs. 5,00,000 total taxable income pay a penalty of Rs. 1,000.
There are many benefits that taxpayers miss out on filing ITR after the due date. Any loss incurred from the business income or capital gains or loss beyond Rs. 2 lakh under the house property head cannot be carried forward to the subsequent year.
If a taxpayer misses the final deadline i.e. March 31, 2024, then the Income Tax Department can charge a minimum penalty that equals 50% of the tax.
If the amount of tax sought to be avoided exceeds Rs. 10,000, it could result in a minimum sentence of three years and a maximum of seven years of imprisonment.
