Income tax filings are an essential part of any business, and in India, the process can be somewhat confusing for entrepreneurs. This comprehensive guide to income tax filings for businesses in India will help you cut through the clutter and help you comply with the law without breaking too much of a sweat. It covers everything from setting up an income tax filing system to dealing with common issues like employee taxes and business expenses. We’ll also walk you through how to calculate your profit or loss as well as how to handle investments and deductions as an entrepreneur.
Important dates
The due date for filing business tax returns is 31 March every year. If you are new to GST, however, your deadline will be 28 August 2018. The reason is that you don’t need to file GST on turnover less than INR 40 lakhs per annum. So if your turnover crosses 40 lakhs after 1 July 2022, you have until 28 August 2022 to file your first set of returns and keep doing so on a monthly basis thereafter. The due date for filing income tax returns as an individual or HUF (Hindu Undivided Family) is 15th July every year. However, there are certain conditions under which you can get an extension from the Income Tax Department by paying a fee and applying for it before 15th June. Most people end up applying for such an extension because it’s easy to do and doesn’t require any paperwork. It simply means that your return will be accepted by 23rd September instead of 15th July—which is no big deal since most people take time anyway while preparing their taxes at home.
What you should file
The income tax office accepts your company’s TDS certificate from last year as a proof of filing if you have not filed your return for more than 3 years. This certificate should be submitted along with Form 16 at the time of filing your return for FY 2020-21. If you are not filing returns for more than 5 years, then you need to file a complete IT return within 6 months from end of FY 2021-22. In case there is no turnover or loss during FY 2020-21 and FY 2021-22, then you don’t need to file any return for these two financial years. In case there is no turnover or loss during FY 2018-19 also, then you don’t need to file any return for these three financial years.
If you own a business, here are four things to know about income tax returns for businesses in India
Firstly, every Indian business must file a tax return, whether or not it had a profit for that year. Secondly, most small businesses can file for two tax periods each year; one for quarterly returns and one for annual returns. Thirdly, you can choose which date your fiscal year ends on. And fourthly, you may be able to get an income tax refund if you’ve paid too much in advance. Here’s what else you need to know about filing taxes as a business owner
First of all, every business must file a tax return with their appropriate jurisdiction. In most cases, they will have to do so annually. A company’s legal status determines which form they need to fill out: businesses with directors will use Form IN-1B while those without directors will use Form IN-1.
How does this affect employees?
If your business generates a profit and you’re not paying yourself a salary, you might have to pay income tax. But that doesn’t mean you need to start filing quarterly or annual returns. As long as your taxable income is under Rs 10 lakh (Rs 1 million) per year, all you need to do is file an annual return with the government. As part of this, you’ll have to list all your expenses, revenue, and profits for that year. If you’ve reached that limit, though—or if your situation falls outside of what’s stated above—you’ll need to send quarterly/annual filings too. This varies by industry and business size—for example: Quarterly filings are required if your business makes more than Rs 50 lakh (Rs 5 million) per year.
The pros and cons of filing your own taxes as a sole proprietor or partnership firm
Since every business structure is different, there’s no single answer as to whether you should hire a CPA or do your own taxes. I suggest asking yourself these questions:
1) How complicated are my financials?
2) Do I know what all deductions I can take?
3) Is it worth my time? If you’re not a tax expert and you find that answering these questions requires more time than you have, it might be best to hire an accountant.
On the other hand, if you’re running a simple company with straightforward finances, doing your own taxes could save you money. In fact, for some sole proprietorships and partnerships (those with under $5 million in revenue), doing your own taxes can actually end up saving you more money than hiring an accountant!
The importance of keeping track of receipts: It’s important to keep receipts for all expenses related to your business so that when tax season rolls around next year, filing will be easier on both you and your accountant. Your records will also help keep track of how much money has been spent on specific items like travel or entertainment so that come tax season next year, it’ll be easier for you to determine which expenses qualify as deductible business expenses versus personal ones.
Is it worth hiring an accountant?
Are you overwhelmed with all of your business taxes? Hiring an accountant is a great way to make sure you are filing correctly. The cost of hiring an accountant will be significantly less than paying penalties and interest if you get audited. Since not everyone needs all the same services, meeting with a few different accountants and getting quotes will ensure that you find one that fits your specific business tax needs. More importantly, though, it also helps prevent error when it comes to filing because your company is going through multiple eyes. If you run into any issues with IRS or State returns, having an experienced professional on hand can help smooth things over quickly. It’s easy to feel intimidated by IRS forms and rules but there’s no reason for it! As long as you have someone helping you who knows what they’re doing, filling out your tax forms should be relatively painless. And once everything is filed correctly, you won’t have to worry about anything until next year!
0 Comments