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Income Tax Filing

01 ITR-1

Applicability: Individuals with an annual income of less than Rs. 50 Lakhs earned through salary or pension and possessing only one house property.

03

Applicability: NRIs, Directors of Companies, shareholders of private companies, individuals with capital gains income, income from foreign sources, two or more house properties, or income exceeding Rs. 50 lakhs.

03 ITR-3

Applicability: Professionals or individuals operating a proprietorship business in India.

04 ITR-4

Applicability: Taxpayers enrolled under the presumptive taxation scheme with business income below Rs. 2 crores or professional income below Rs. 50 lakhs.

05 ITR-5

Applicability: Partnership firms, LLPs, associations, and bodies of individuals reporting their income and tax computation.

06 ITR-6

Applicability: Companies registered in India.

07 ITR-7

Applicability: Entities claiming exemption as charitable/religious trusts, political parties, scientific research institutions, colleges, or universities.

Penalty for Late Filing Income Tax Return

Penalties for Late Filing of Income Tax Return:

Taxpayers failing to submit their income tax return on time are liable for penalties and may incur interest on late tax payments. The recent updates in the penalty structure for late filing of income tax return are as follows:

✓ Late Filing between 1st August and 31st December: Rs. 5,000
✓ Late Filing After 31st December: Rs. 10,000
✓ Penalty if taxable income is less than Rs. 5 lakhs: Rs. 1,000
✓ Business Proof to show Business Operation Information

It is crucial for taxpayers to adhere to the deadlines to avoid these penalties and stay in compliance with tax regulations

Income Tax Return Due Date

The deadline for individual taxpayers to file their income tax returns is set at 31st July each year. For companies and taxpayers necessitating a tax audit, the due date for income tax return filing is extended to 30th September.

Entity

If the total sales turnover or gross receipts in a business surpasses Rs. 1 crore in any preceding year, a tax audit becomes necessary..

Professional

A tax audit is mandated for professionals or individuals in a profession if their gross receipts in that profession exceed Rs. 50 lakhs in any of the preceding years.

Presumptive Taxation Scheme

Presumptive Taxation Scheme and Tax Audit:

If an individual is enrolled under the presumptive taxation scheme as per section 44AD and the total sales or turnover exceeds Rs. 2 crores, a tax audit becomes necessary.

Late Filing Penalty Increase:

The penalty for late filing of income tax returns has been raised to Rs. 5,000 for returns submitted between 1st August and 31st December.

ITR-1 stands as the most commonly utilized income tax form in India. Individuals whose income sources are confined to salary and a single house property typically file ITR-1.

Business Tax Return Filings

Simplified Business Tax Return Filings:

Establishing a business and navigating the intricacies of return filing is crucial for seamless business operations. The business tax return, applicable to companies, functions as a comprehensive record encompassing the company's income and expenses.

We've streamlined the process of Business Tax Return Filings in India. Our dedicated team is here to facilitate a stress-free experience, ensuring businesses meet deadlines and adhere to regulations. Whether your business is in its early stages or well-established, our assistance is tailored to your needs, providing support at every step.

What is a business tax return?

A business tax return is specifically designed for reporting the income and financial details of businesses. It constitutes a detailed report encompassing a business's income, expenses, and relevant tax information, presented in a designated form. This annual process includes the submission of income tax returns for businesses, incorporating the reporting of Tax Deducted at Source (TDS).

The business tax return serves as a comprehensive financial statement, detailing not only earnings but also various financial components such as fixed assets, loans obtained, loans extended, debtors, and creditors within the business. It provides a thorough documentation of the financial aspects crucial for the assessment of the business's financial health.

Income Tax Return Filing in India

Both Indian citizens and companies are required to file income tax returns if their Gross Total Income (GTI) exceeds Rs. 3 lakhs (amounts below three lakhs are exempted). These income tax returns must be submitted annually within the specified deadline. Various income tax return forms are available, tailored to different criteria applicable to multiple groups of individuals and businesses. It is essential to identify the appropriate arrangements and submit them to the Income Tax Department of India for processing.

Benefits of Accurate and Timely Income Tax Filing for Businesses:

01 Refund Claims

Accurate and timely filing can lead to potential refunds, improving cash flow within the business.

02 Carry-forward of Losses

Losses incurred in one financial year can be carried forward and adjusted against future profits, reducing tax liabilities.

03 Loan Applications

Proper and up-to-date income tax returns serve as evidence of financial stability, enhancing the chances of obtaining loans or credit from financial institutions.

04 Evidence for Transactions

Filed tax returns provide solid proof of the business's financial transactions and activities, useful for legal or contractual purposes.

05 Compliance with Law

Filing tax returns ensures compliance with tax regulations, helping businesses avoid penalties or legal issues.

06 Transparency

Transparent financial records through tax returns enhance the business's credibility, fostering trust among customers, partners, and stakeholders.

07 Audit Preparedness

Filed returns provide a basis for accurate financial statements, preparing the business for potential tax audits.

08 Business Growth

Accurate financial reporting through tax returns assists in making informed business decisions, aiding in growth and expansion strategies.

09 Avoiding Notices:

Timely and accurate filing reduces the likelihood of receiving notices or queries from tax authorities.

10 Availing Tax Benefits:

Filing returns on time enables businesses to avail various tax benefits and deductions legally, optimizing their tax liabilities.

Who Should File a Business Tax Return?

The requirement to file a tax return is obligatory for all eligible businesses operating within the framework of Indian tax regulations. The necessity to file a business tax return is dependent on the structure of the business:

✓ Sole Proprietorship
✓ Partnership Firm
✓ Limited Liability Partnership (LLP)
✓ Companies – Private Limited Company, One Person Company

Types of Business Tax Return Filing

The classification of Business Tax Returns is based on the types of business entities permitted to submit them. These categories align with various business structures and their corresponding designations:

✓ Partnership Firm Tax Return Filing
✓ Proprietorship Tax Return Filing
✓ Limited Liability Partnership Tax Return Filing
✓ Company Tax Return Filing

Proprietorship Tax Return Filing

Proprietorship Income Tax Filing:

An individual with business income is deemed to be operating a proprietorship firm. Proprietorships in India are mandated to file income tax returns annually. As proprietorships are treated as extensions of their owners, the income tax return filing process for a proprietorship is akin to filing an individual income tax return.

Income Tax Rate for Proprietorship

The income tax rate for proprietorships mirrors the rates applicable to individuals. In contrast to the flat rates imposed on LLPs or Companies, proprietorships are taxed based on slab rates. The income tax rate for proprietorships for the assessment year 2023-24, when the Proprietor's age is less than 60, is as follows:

Proprietorship Tax Rate AY 2024-25 | FY 2023-24 under Normal Tax Regime:

Proprietorship Tax Rate AY 2023-24 | FY 2022-23 – Proprietor's age is less than 60 years:

Net Income Range	Rate of Income Tax (%)
Up to Rs. 2,50,000	-
Rs. 2,50,001 to Rs. 5,00,000	5
Rs. 5,00,001 to Rs. 10,00,000	20
Above Rs. 10,00,000	30

Proprietorship Tax Rate AY 2023-24 | FY 2022-23 – The Proprietor's age is between 60 and 80 years:

For a Proprietor who turns 60 during the previous year but is younger than 80 on the last day of the previous year, the following tax rates apply:

Net Income Range	Rate of Income Tax (%)
Up to Rs. 3,00,000	-
Rs. 3,00,001 to Rs. 5,00,000	5
Rs. 5,00,001 to Rs. 10,00,000	20
Above Rs. 10,00,000	30

Proprietorship Tax Rate AY 2023-24 | FY 2022-23 – Proprietor's age is above 80 years:

Net Income Range	Rate of Income Tax (%)
Up to Rs. 5,00,000	-
Rs. 5,00,001 to Rs. 10,00,000	20
Above Rs. 10,00,000	30

Rates of Surcharge for Proprietorship - Assessment Year 2023-24:

Range of Income	Surcharge Rate
Rs. 50 Lakhs to Rs. 1 Crore	10%
Rs. 1 Crore to Rs. 2 Crores	15%
Rs. 2 Crores to Rs. 5 Crores	25%
Above Rs. 5 Crore	37%

Tax Audit for Proprietorship

A proprietorship firm must undergo an audit if its total sales turnover exceeds Rs. 1 crore in the financial year. Similarly, professionals are required to undergo an audit if their total gross receipts surpass Rs. 50 lakhs during the financial year under assessment.

Due Date for Filing Proprietorship Tax Return:

For a proprietorship that doesn't require an audit, the income tax return is due on July 31. If the income tax return of a proprietorship needs to be audited according to the Income Tax Act, then the return would be due on September 30.

Partnership Firm Tax Return Filing

Income Tax Filing for Partnership Firms:

All partnership firms are obligated to file income tax returns, irrespective of whether they incur income or loss. Partnership firms are treated as distinct legal entities under the Income Tax Act. Consequently, the income tax rate applicable to partnership firms is akin to that for LLPs and Companies registered in India.

Mandatory Filing of Partnership Firm Tax Return:

Every partnership firm is obligated to file income tax returns annually, regardless of whether the firm incurred income or suffered a loss. If there was no business activity during the financial year, a NIL income tax return must still be filed by the partnership firm before the due date.

Partnership Firms Income Tax Rate

Partnership firms are obliged to pay income tax at a rate of 30% on their total income. Additionally, a partnership firm must pay a 12% income tax surcharge on the income tax amount when the total income exceeds Rs. 1 crore. Furthermore, the partnership firm is required to pay Health and Education Cess, applied at a rate of 4% on the income tax amount and the surcharge.

Tax Audit for Partnership Firm:

Partnership firms engaged in business with total sales exceeding Rs. 1 crore are mandated to undergo tax audits. Similarly, partnership firms engaged in a profession where gross receipts surpass Rs. 50 lakhs in the previous year are also obligated to undergo tax audits. Additionally, other applicable conditions may necessitate a tax audit for a partnership firm.

ITR Form for Partnership Firm Return Filing:

Partnership firms are obligated to file income tax returns using Form ITR 5. Similar to other income tax forms, ITR 5 is an attachment-less form, and there is no necessity to submit any documents or statements along with the partnership firm tax return. However, the taxpayer must retain all records related to the business and present them before tax authorities when requested.

Every Limited Liability Partnership (LLP) is required to submit an income tax return, regardless of its financial outcome. LLPs, recognized as distinct legal entities, are subject to individual taxation apart from their partners. The income tax rate applicable to LLPs aligns with that of registered companies in India.

LLPs must fulfill the obligation of filing annual income tax returns, even if the LLP did not generate income or incurred losses. In instances of no business activity, it is imperative to submit a NIL income tax return before the specified due date.

For LLPs registered in India, the income tax rate stands at 30% of the total income. Additionally, an extra surcharge of 12% is levied on the income tax when the total income exceeds Rs.1 crore. Furthermore, a Health and Education Cess of 4% applies to the income tax and surcharge of an LLP.

Similar to the taxation rules for companies, LLPs are subject to Minimum Alternate Tax (MAT). A MAT of 18.5% on the adjusted total income is applicable to LLPs. Hence, the income tax payable by an LLP cannot fall below 18.5%, accounting for increases due to income tax surcharge, education cess, and secondary and higher education cess.

LLPs with a turnover surpassing Rs. 40 lakh or a contribution exceeding Rs. 25 lakh are mandated to undergo an audit conducted by a practicing Chartered Accountant. Furthermore, LLPs involved in international transactions with associated enterprises or specific Specified Domestic Transactions must file Form 3CEB, requiring certification from a Chartered Accountant. The deadline for LLPs mandated to file Form 3CEB is November 30.

The deadline for LLP tax filing in India is set for July 31. In cases where LLPs are required to undergo a tax audit, the income tax return must be filed by September 30.

LLPs are expected to file income tax returns using Form ITR 5, and the filing process must be done online with the digital signature of one of the designated partners of the LLP.

Every company registered in India is obligated to submit annual income tax returns. According to the Income Tax Act, there are two categories for company tax return filing: domestic companies and foreign companies. Domestic companies include those registered with the Ministry of Corporate Affairs, such as Private Limited, Personal, or Limited Companies.

All companies, regardless of their income, profit, or loss, must file income tax returns annually. This includes dormant companies with no transactions, which are also required to file income tax returns each year.

For the Assessment Year 2024-25, domestic companies with a total turnover of less than Rs. 400 crores in 2020-21 are subject to an income tax rate of 25% of the total income. For companies with a turnover exceeding Rs. 400 crores in the year 2020-21, the income tax rate is 30%. Additionally, companies must pay a surcharge and Health and Education Cess at 7% on income tax and surcharge.

All companies are mandated to pay a minimum alternate tax at a rate of 15% of book profit, plus surcharge and education cess if the company's tax liability is less than 15% of the book profit.

A company's accounts must undergo an annual audit conducted by a Chartered Accountant, irrespective of its turnover or profit/loss.

All companies registered in India must file income tax returns on or before September 30. For companies incorporated between January and March, MCA annual returns can be filed after 18 months in the first year. However, this exemption is not applicable under the Income Tax Act. Therefore, even companies registered from January to March must file income tax returns on or before September 30 of the same calendar year.

Companies engaged in profit-oriented business operations in India are required to file Form ITR 6. This includes private limited companies, limited companies, and one-person companies, all of which are mandated to file Form ITR6.

Income Tax Notice

Receiving notices from the Income Tax Department can happen for various reasons, such as failure to file income tax returns, defects in the filing process, or when additional documents or information are required by the tax department.

Understanding the nature of the notice, the specific request or order it contains, and taking appropriate steps to comply are essential for taxpayers. We provide a comprehensive range of services to assist individuals and businesses in meeting their compliance requirements. If you receive an income tax notice, you can contact the Tax Experts to comprehend the notice and decide on the necessary course of action.

Types of Income Tax Notice

Various types of income tax notices are issued by the Income Tax Department, each serving a specific purpose. Here are explanations for different types of notices:

01 Notice u/s 143(1) - Intimation

This notice is commonly received and seeks a response to errors, incorrect claims, or inconsistencies in the filed income tax return. If a revision is needed, it must be done within 15 days; otherwise, the return will be processed with necessary adjustments.

02 Notice u/s 142(1) - Inquiry

This notice is sent to the assessee when further details and documents are required to complete the return filing process. It may also be issued to request additional documents and information.

03 Notice u/s 139(1) - Defective Return

If the filed return lacks necessary information or contains inaccuracies, a notice under Section 139(1) is issued. The assessee must rectify the defects within 15 days.

04 Notice u/s 143(2) - Scrutiny

This notice is issued if the tax officer is dissatisfied with the documents and information submitted by the taxpayer. It indicates that the taxpayer has been selected for detailed scrutiny, requiring the submission of additional information.

05 Notice u/s 156 - Demand Notice

Issued when tax, interest, fines, or other sums are owed by the taxpayer, it specifies the outstanding amount due and demands payment.

06 Notice Under Section 245

If the officer believes there are unpaid taxes from previous years, and they want to set off the current year's refund against that demand, a notice under Section 245 is issued. The recipient must respond within 30 days.

07 Notice Under Section 148

Issued when the officer believes the taxpayer has not disclosed income correctly, paid lower taxes, or failed to file a return. The assessing officer serves a notice under Section 148, asking the assessee to furnish their return of income before assessment or reassessment.

Understanding the nature of these notices is crucial, and timely responses are recommended to avoid complications in the assessment process. If you receive such notices, seeking professional advice can be beneficial. We provides comprehensive services to assist taxpayers in meeting compliance requirements and addressing income tax notices effectively.

What documents are required to reply to an Income Tax Notice?

The documents required to respond to an Income Tax Notice may vary depending on the type of notice received. However, some basic documents commonly needed include

Income Tax Notice Copy

Provide a copy of the received Income Tax Notice, which serves as the primary document for understanding the nature of the notice and its requirements.

Proof of Income Source

Include documents that serve as proof of your income source, such as Part B of Form 16, salary receipts, or any other relevant documents that validate your income.

TDS Certificates, Form 16 (Part A)

Include TDS certificates and Part A of Form 16, which provide details of tax deducted at source. These documents help in verifying the TDS details associated with your income.

Investment Proof

If applicable, provide proof of investments made, which may include documents related to deductions claimed under various sections of the Income Tax Act.

It's important to note that the specific documents required can vary based on the nature of the notice and the information requested by the Income Tax Department. Seeking assistance from tax experts is recommended for a thorough review of the notice and guidance on the necessary documents. Once the Income Tax Notice copy is uploaded, tax experts can analyze the situation and provide the best possible solution, along with any additional documentation requirements. This approach ensures a comprehensive and accurate response to the Income Tax Notice.

Form 16 Issuance to Employees

Form 16 is a certification provided by employers to their employees, confirming the deduction and submission of TDS (Tax Deducted at Source) on the employee's behalf to the government.

This document furnishes a comprehensive overview of the employee's salary and the corresponding TDS deductions. TDS Form 16 incorporates all the necessary details for individuals to compile and submit their income tax returns.

Employers are obligated to furnish this Salary TDS certificate annually, by or before June 15 of the following year, immediately succeeding the financial year in which the tax deductions occurred. Form 16 comprises two sections: Part A and Part B. In the event of Form 16 loss, individuals have the option to request a duplicate form from their employer, ensuring they have the essential documentation for accurate income tax return filing.

Structure of Form 16

Form 16 is a critical document issued by employers to employees, confirming the deduction and deposit of TDS (Tax Deducted at Source) on behalf of the employee. This document offers a detailed summary of the salary paid and the corresponding TDS deductions, with Form 16 being structured into two parts: Part A and Part B.

Part A contains crucial details, including the employer's name and address, TAN and PAN of the employer, and the PAN of the employee. It also furnishes a quarterly summary of tax deducted and deposited, duly certified by the employer. On the other hand, Part B serves as an annexure to Part A and is compiled by the employer for its employees. Part B provides a detailed breakup of salary and deductions approved under Chapter VI-A of the Income Tax Act. In instances of job changes within a financial year, individuals are advised to obtain Form 16 from both employers. Part B of Form 16 encompasses a comprehensive breakdown of salary, detailed information on exempted allowances under Section 10, and deductions permitted under the Income Tax Act (Chapter VIA).

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