Business Tax Filing
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- Fewer legal formalities than LLP.
- Associated with the GST and income tax departments.
- Full control over the business for the sole proprietor.
- No separate business tax filings.
- Easy to disassemble.
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Smooth ITR Filing for Income from Business and Profession
Those earning an income from business and profession must file a business tax return. So, when filing its returns, you must consider earnings generated from self-employment, professional services or business. Besides that, those earning profits from sole proprietorships, partnerships, and other businesses should also consider filing the business income tax. The business tax return contains information about loans, fixed assets, debtors and creditors.
5 Steps to File ITR for Business Income
You must complete the ITR-3 or ITR-4 (Sugam) form to file an ITR for business income. However, ensure that you have all the related documents.
Step 1:
Visit the Income Tax Department’s official portal. Log in and select 'Income Tax Return' under the 'e-file menu'.
Step 2:
Fill in your appropriate details and mention whether the filing type is an original or revised return. Then, select the ‘Prepare and Submit Online’ option.
Step 3:
Click ‘continue’ and fill in the ITR-3 or ITR-4 form. You can save it as a draft if you cannot complete it all simultaneously.
Step 4:
Verify your details, preview the form, and click ‘preview and submit.’
Step 5:
Submit the form. The filing status on your account will be updated after a verification from the Income Tax Department.
Documents for Filing ITR Business Income
- Profit and Loss Account (P&L)
- Balance Sheet of the financial year
- Form 26AS
- TDS Certificates
- GST information
- Advance Tax/Self-Assessment Tax Challans
- Bank Statements
- Cash Book/Day Book
- Sales and Purchase Invoices
- Depreciation Schedule
- Audit Reports
- Expenditure Proofs
- Loan Documents
Proceed to file the ITR business income once you have the required documents.
Importance of Filing Business Tax Returns
- Not filing business tax returns results in penalties and legal action, which might breach your business’ reputation.
- Businesses can carry forward losses to offset future income only if they file returns.
- Accurate tax filings can help in financial planning and decision-making for business growth.
- Filing returns on income tax from business and profession results in a clear image of your business, which attracts investors, potential partners and creditors.
- A clean tax return history can positively impact loan and credit applications for the business.
- Timely business income tax return filing promotes financial discipline and proper record-keeping.
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Final Words
Filing returns on income from business and profession is mandatory for all businesses eligible for filing the ITR-3 and ITR-4 forms. It is associated with legal compliance, accurate tax assessment, and claiming refunds. Moreover, it helps with financial planning, supports loan applications, and contributes to national development. However, you must stay in line with the changes in the rules and the right tax consultant will help you.
FAQs
Who Should File Returns on Income from Business and Profession?
Sole proprietorships, partnerships, Limited Liability Partnerships (LLPs) and companies should file returns on income from business and profession.
Who Cannot Fill Out the ITR-4 Form?
A director of a company, the one having an asset outside India, the person with an income source outside India, the signing authority outside India, the one having a total income above Rs. 50 lakhs and the one who holds unlisted equity shares cannot fill out the ITR-4 form.
Should I File Business Tax Returns if My Partnership Firm Suffers a Loss?
Yes, you should file business tax returns irrespective of your partnership firm’s income, loss or business activity.
What Are the Common Business Tax Return Forms in India?
ITR-3 and ITR-4 are primarily used for businesses. ITR-3 is for regular companies, while ITR-4 is for those opting for the presumptive taxation scheme.
Can I File a Revised Business Tax Return?
Yes, you can file a revised return to rectify errors or omissions in the original return.
