Every business in India has a mandatory tax return filing every year. It is a statement that includes all the expenses and the income of the business. It also declares tax to be paid by the business on profit. The ITR has the details of:
· Assets of the business
· Debtors and creditors of the trade
· Loan taken or given by the business
Barring the income tax return filing, a business may also be required to file an Online TDS return and pay advance tax. In this article, we take a look at the various businesses that operate in India and the tax they are required to pay under the Income Tax Act.
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Tax return filing of proprietorship
A business owned by one person is called a proprietorship. Such firms are liable to pay income tax every year. Since the owner of the business and the firm are considered as one legal entity, only one income tax return is filed. The procedure for it precisely like ITR filing of an individual.
If the proprietor is under the age of 60 and the total income of the business is over Rs. 2.5 lakhs, they are liable to pay tax. If the owner of the firm is over 60 years and under 80, then tax needs to be paid only if the total income is above Rs.3 lakhs. For proprietors above 80, the filing ITR is mandatory if the income is beyond Rs.5 lakhs.
The rate of tax applied to proprietorship is the same as an individual, and it is given below:
o Rs. 0 – Rs. 2,50,000: 0% tax
o Rs. 2,50,001 to Rs. 5,00,000: 5% tax
o Rs. 5,00,001 – Rs.10,00,000: 20% tax
o AboveRs. 10,00,000: 30% tax
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ITR filing for LLP, Firms, and Companies in India
A partnership, an LLP or a company has to file their income tax return every year regardless of the fact that profit was made or loss was borne. Even if in the given financial year, they didn’t conduct a single operation returns still need to be filed. The rate of income tax applied is at flat 30% for partnerships and LLPs. Over and above this, a partnership pays a tax surcharge.
The surcharge is applied at 12% on the income tax amount if the complete income of the partnership is above Rs. 1 Crore. A 4% Health & Education cess is further applied to the income tax plus surcharge amount.
For companies within India, the income tax rate for AY 19-20 is 25% if their turnover is below Rs. 250 crores. If the turnover is above Rs. 250 Crore, then the tax rate applicable is 30% just like LLPs and partnerships. Domestic companies also need to pay a surcharge and 4% Health & Education Cess similar to LLPs.
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Presumptive tax in India
On a presumptive basis, business in India such as HUF and individuals, can tender their income to tax. For the presumptive tax to apply, the turnover of a professional has to be over Rs. 50 Lakh and a business Rs. 2 Crore. For businesses, 8% of the turnover is given as income. In the case of professionals, they have to declare half of all receipts in the tax return.
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Due dates for filing tax returns for businesses
Individual businesses that do not require a tax audit should submit their ITR by 31st August after the financial year has ended, i.e., 31st March. Late ITR can be filed till 31st March of the next year, but they get a penalty.
Businesses that necessitate a tax audit along with LLPs, partnerships and companies, the last date for tax return filing is 30th September. Again, after the financial year has ended. At times, the due dates are extended by the government. For instance, in the fiscal year 2017-18, the due date was changed from 30th Sept. to 31st October.
The process of income tax return filing for each business entity differs. The form that is used, the tax rate that is applied, and the exemptions allowed. This article was merely meant as a guide to your eyes. Always consult professionals for more legal advice.
