04 Oct

Filing business tax returns Types of business tax returns and business taxes

Filing business tax returns: Types of business tax returns, business taxes

Understanding the intricacies of starting a business and 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. Returns are a statement of business income and expenses. Also, any tax on your profits is declared in this return. The return also contains details of the assets and liabilities the business has. Fixed assets, borrowers and business lenders, what was borrowed and what was lent are declared here.

Who has to file a business tax return?

Filing a return depends largely on the type of business structure.

 For example:

If you are the sole owner, your business income and your other personal income such as salary, household property income and interest income will have to be mentioned on the same return.

If your total income exceeds the basic taxable limit before deduction, you must file your income tax return regardless of the profit or loss of your business.

The basic taxable limit is Rs. 2.5 lakhs. So, if your income is more than Rs 2.5 lakh before deduction, you need to file your business tax return.

Business tax returns for companies, firms and limited liability partnerships (LLPs) have to be paid regardless of profit or loss. Even if no operation is performed, the return has to be filed.

Companies, firms and LLPs are taxed at a rate of 30%.

Income tax audit

Each taxpayer with a turnover of Rs. 1 crore in case of business and In the case of professionals, Rs 50 lakh is required to audit taxes. Taxpayers have to hire a chartered accountant to audit their accounts.

Also, if your business has suffered a loss and you want to further the carry forward the loss, a tax audit is required. Tax audit is required even if the profit declared by you is less than 8% of turnover in the case of business (6% on digital transactions) and 50% in the case of professional receipts.

Presumptive Taxation

Individuals, HUFs, and companies that run businesses or provide services may tax their income on an assumed basis. The turnover allowed to levy a potential tax for business is Rs. 2 crore and Rs. 50 lakhs for professionals

The business has to pay at least 8% of the turnover income on a probabilistic basis. For professionals, 50% of business receipts must be declared on the business tax return.

What is the deadline for filing returns?

For persons not liable for a tax audit, the last date for filing returns after the end of the financial year is 31st December 2021 (late returns can be filed under penalty till 31st March). For the tax audit businesses financial year 2020-21, this date has been extended from 31 October 2021 to 15 February 2022.

Penalty for non-filing of returns- Any loss incurred during the year cannot be reimbursed if the return is filed after the last date of filing of income tax returns.

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



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