Document

Business Tax Returns Filing : Types of Business Tax Returns, Business Taxes

Updated on: Jun 13th, 2024

|

9 min read

Setting up a business and understanding the complexities involved in filing returns is an important aspect of running a business. 

What is a Business Tax Return?

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.

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 other personal income, such as 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 Partnerships (LLP), a business tax return has to be filed regardless of profit or loss. Even if no operations are undertaken, a return has to be filed.
  • Companies, firms, and LLPs are taxed at a rate of 30%.

Types of Business Tax Return Filing

The different types of business tax return filing is named on the basis of business entities that are entitled to file these returns, i.e. different structure of businesses and their names accordingly.

  • Sole proprietorship tax return filing: Under this type, a single owner operating the proprietorship firm has to file an income tax return annually. The firm is considered the same as the proprietor, and therefore the tax return filing procedures, are similar to that of the proprietor’s individual income tax return filing.
  • Partnership firm tax return filing: Partnership firms are formed by two or more individuals to run a business. Hence, unlike Sole proprietorships, partnership firms under the Income Tax Act are taxed as individual legal entities. They are required to file income tax returns, irrespective of gain or loss.
  • Limited Liability Partnership tax return filing: This is an alternative form of corporate business which includes the benefits of limited liability of a company and, at the same time the flexibility of being in a partnership form of business. For tax purposes, it is a flow-through entity. This basically means that partners of this firm obtain untaxed profits, but the tax is payable individually. 
  • Company tax return filing: Business Income Tax Return filing for a company is of two categories, i.e. the domestic company or the foreign company. The companies that are registered with the Ministry of Corporate Affairs such as Private Limited companies, one person company/ company limited fall under domestic company. Whereas, a foreign company is formed under the laws of the foreign land.

Income Tax Audit

Tax audit is applicable for the following businesses and professionals:

  • Businesses where the total sales, turnover, or gross receipts exceeds Rs.1 crore in the previous year. This limit has been increased to Rs.5 crores from AY 2021-22 and further to Rs.10 crore with effect from AY 2022-23 (FY 2021-22) provided - 
    • Cash receipts are below 5% of the gross receipts or turnover
    • Cash payments are below 5% of the aggregate payments
  • Professionals whose gross receipts from profession exceed Rs.50 lakh in the previous year 

For more details on the applicability of tax audits for businesses opting for presumptive taxation, click here.

Also, a tax audit is required if there has been a loss of your business and you want to carry forward the loss. Tax Audit is necessary for assessees carrying on business eligible for presumptive taxation u/s 44AD, 44AE, 44BB, 44BBB and claiming income lower than the prescribed limit under the presumptive taxation scheme.

Presumptive Taxation

Individuals, HUF, and Firms running businesses or providing services can offer their income to tax on a presumptive basis. Turnover up to which presumptive taxation is allowed for businesses is Rs.2 Crore and for professionals is Rs.50 Lakh.

For businesses, a minimum of 8% of turnover has to be offered as income on a presumptive basis. For professionals, 50% of professional receipts have to be declared on the business tax return.

What are the Due Dates for Filing of Returns?

Category of Taxpayer

Due Date for Tax Filing - FY 2023-24
*(unless extended)

Individual / HUF/ AOP/ BOI     
(books of accounts not required to be audited)

31st July 2024

Businesses (Requiring Audit)

31st October 2024

Businesses requiring transfer pricing reports   
(in case of international/specified domestic transactions)

30th November 2024

Revised return

31 December 2024

Belated/late return

31 December 2024

Updated return

31 March 2027 (2 years from the end of the relevant Assessment Year)

The penalty for non-filing of returns- Any loss incurred during the year cannot be carried forward if the return is filed after the due date of filing the income tax return.

Also, a fine of Rs.5000 under the section 271F can be levied on the assessee.

Frequently Asked Questions

Who is required to file a business income tax return?

All businesses, including sole proprietorships, partnerships, LLPs, and companies, must file an income tax return if they have income exceeding the basic exemption limit, have carried out any business or professional activity, or if they are subject to audit under Section 44AB of the Income Tax Act.

What are the due dates for filing income tax returns?

  • Non-audit cases (individuals, HUFs, businesses not requiring audit): July 31 of the assessment year.
  • Audit cases (Individuals, HUFs, businesses and professions requiring audit): October 31 of the assessment year.
  • Companies requiring transfer pricing report: November 30 of the assessment year.
Can a business carry forward and set off losses?

Yes, business losses can be carried forward for eight years and set off against future business profits. Certain losses, such as speculative business losses, can only be set off against similar types of income. It is allowed only when the income tax returns are filed within the applicable due dates.

 

 

Public Discussion

Get involved!

Share your thoughts!

summary-logo

Quick Summary

Business tax return is crucial for understanding a business's income, expenditure, and tax responsibilities. Sole proprietors, companies, and LLPs have different tax return filing requirements. Tax audits apply based on business turnover and loss carry forward rules. Presumptive taxation offers simplified tax options. Due dates for filing returns vary depending on the taxpayer category.

Was this summary helpful?
liked-feedbackliked-feedback

Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use

ISO

ISO 27001

Data Center

SSL

SSL Certified Site

128-bit encryption