ITR Filing – Everything You Need To Know For Your Business

Businesses get hassled by the mere mention of the term income tax returns or ITR owing to the lack of correct and thorough knowledge regarding the filing of returns and the procedure to carry out the same. It is an added responsibility for them along with operating their business. Businesses would prefer information that is easy to comprehend or even a service that can handle the income tax return filing for them while the business concentrates on its operation and management. 

The information below will help dispel the common doubts and concerns regarding ITR and provide a solution to tackle ITR woes too. 

• What Is ITR?

Income tax return or ITR is a statement of the income earned by the assesses through various sources and their tax liability thereon. Alternatively, ITR or Income Tax Returns can be defined as a form in which the taxpayers file information about their income earned and tax applicable to the income tax department. 

The applicability of ITR forms varies depending on the sources of income of the taxpayer, the amount of the income earned and the category the taxpayer belongs to like individuals, HUF, company, etc. 

• Who Needs To File ITR Returns?

All businesses and taxpayers whose income is taxable must opt for ITR filing. For businesses with no income or non-taxable income, it is recommended to file ITR even if they don’t have a tax payment liability.

• What Are The Taxable Sources Of Income?

The various sources of income that can be taxed include-

• The income from salary
• The profits and gains from a profession or a business
• The income from a house property
• The income from capital gains 
• The income from other sources such as interest on deposits, dividends, royalty income, gains from selling a house, winning a lottery or prize money, etc.

• When  Do Taxpayers File ITR?

Every taxpayer should file their ITR on or before the specified due date. The ITR filing due date for this year, 2021, for individuals and taxpayers including small businesses, other than a company, that is not covered under tax audits is 30th September 2021. 

• Why Do Businesses Need To File Returns?

Businesses and individuals need to file income tax returns because-

• The income tax returns can be used as proof of income.
• The business income tax returns need to be submitted to lenders when applying for a business loan
• The income tax returns are necessary if the entrepreneur or business intends to claim a tax refund for the excess tax paid while making investments in tax saving instruments.

These are some of the reasons why ITR filing is a must for businesses.

• What Is The Difference Between Financial Year and Assessment Year?

When referring to ITR filing, Financial Year (FY) and Assessment Year (AY) are terms used concerning income tax returns and to businesses. From an income tax perspective, FY stands for the year in which a business or individual earns an income and usually starts from 1st April of the year, ending on 31st March of the next year.

Similarly, AY stands for the year following the financial year in which the business or individual has to evaluate the previous year’s income and pay taxes on it accordingly. The AY is the year after the FY.

• What Are The Various ITR Forms? 

The income tax department has notified 7 forms, namely, ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7 to date, that individuals and businesses need to fill as per their eligibility and applicability to initiate their ITR filing online process.

• ITR-1
• • • This form is also called Sahaj and is to be filed by resident individuals that have a total income up to ₹ 50 lacs from sources such as salary, one house property, agricultural income up to  ₹ 5000 or other sources such as winning lotteries or winning horse races, etc.
• ITR-2
• • • This is form is to be filed by individuals and HUFs who are not eligible to file form ITR-1 and have no income coming from the profits and gains from business or profession.
• ITR-3
• • • This form is to be filed by individual and HUFs having income from profits and gains in their profession or business.
• ITR-4
• • • This form, also called Sugam, is to be filed by resident individuals, HUFs and firms (other than LLPs) having a total income of up to ₹ 50 lacs and having income from business or profession computed under section 44AD, 44ADA or 44 AE.
    • Simply put, this form is for businesses and professions to whom presumptive taxation is applicable and therefore they are not required to maintain a book of accounts.
• ITR-5
• • • This form is for firms, LLPs (Limited Liability Partnerships), BOIs (Body of Individuals), AOPs (Association of Persons), AJP (Artificial Juridical Person, Estate of insolvent or estate of deceased, investment fund and business trust.
• ITR-6
• • • This is form is for companies other than those claiming exemption under Section 11, which is income from property held for charitable or religious purposes.
• ITR-7
• • • This form is for trusts, companies and persons required to furnish return under various sections such as 139(4A), 139(4B), 139(4C), 139(D), 139(4E) or 139(4F). For assistance and detailed information regarding this form or help filing income tax returns, businesses can choose the ITR filing services.

The important income tax forms to be filed by small businesses include ITR-3, ITR-4 and ITR-6 as per the eligibility and applicability.

• What Are The Documents Required For ITR Filing?

The documents that need to be kept ready for ITR filing online include-

• • Form 16
  • PAN card details
  • Aadhar card details
  • Bank account details
  • Investment details

• How Is The ITR Filing Process?

The process of ITR filing is completely online and can be filed through the official website- www.incometaxindiaefiling.gov.in

The income tax liability can also be paid online and the acknowledgement copy of the filed ITR can also be downloaded online via the official website.

It is recommended for businesses to maintain digital copies of filed ITR, if possible, as they might be required for reference purposes at a later date. If that is not possible then businesses are expected to maintain physical copies for the next 8 years at least.

Businesses can file their own ITR through the official website or avoid the hassles and penalties by choosing the ITR Filing services by deAsra Foundation. 

The above information will help answer most of the queries businesses have regarding ITR filing, and how it impacts the business. For other queries or detailed information on ITR businesses can get in touch with deAsra Foundation for their expert guidance and assistance.