All other businesses such as partnership firms, private and public limited companies have to file ITR mandatorily

All businesses in India - whether big or small - have to file Income Tax Returns (ITR) every financial year. The procedure for filing taxes for a business is quite different from that for an individual, subject to the constitution of the business, the sector it operates in and the amount of turnover it declares.

Besides, a business may also be required to file for Tax Deducted at Source (TDS), pay advance tax and declare other assets and liabilities.

Businesses can be of many types. If you are a sole proprietor, your business income and personal income is considered to be one and the same. If your total income exceeds INR 2.5 lakh, you have to file ITR mandatorily. If you make tax-deductible savings or have a business loan, you could offset some of your tax liability.

All other businesses such as partnership firms, private and public limited companies have to file ITR mandatorily, irrespective of profit or loss. Even if no business activity is conducted for the respective financial year, you will have to file a nil ITR.

Understanding tax slabs

Businesses with a turnover of less than INR 400 crore pay tax at 25%, as long as they are a domestic enterprise, while all other businesses pay tax at 30%. If your total income in a year exceeds INR 1 crore, you will have to pay an additional 12% surcharge and 3% cess (on the tax).

Maximizing benefits

Any business loan, whether for working capital needs, machinery or inventory management, can award you a certain deduction on your tax liability. While business loans per se are not tax-deductible, the interest component is considered a business expense and can be claimed as a deduction on your gross income.

Business loan interest rates vary significantly from 20% to 35%, depending on the type of business, financial records and assets. The interest outlay can provide a considerable relief on the tax burden, especially for mid to large size organizations.

ITR forms

Any business that has a turnover of less than INR 2 crore can opt to be taxed presumptively under Section 44AD and 44AE of the IT Act. Such a business will have to use the Sugam ITR-4 to file their returns and does not need to get their accounts audited.

The last date for filing the returns is September 30 and November 30 after the end of the previous financial year for non-audited and audited businesses, respectively.

In closing

A chartered accountant will be able to assist best regarding your tax liabilities and available benefits. However, for your capital needs, avail a business loan and enjoy the fruits of you business. The easy repayment terms and attractive interest rates are especially suitable for MSME businesses.