Difficulty in Business Tax Filing for F.Y 2021-22? Read article for easy guide.

Difficulty in Business Tax Filing for F.Y 2021-22? Read article for easy guide.

Difficulty in Business Tax Filing for F.Y 2021-22

Business tax return filing is income tax return with additional filing of TDS return, Advance Tax Payment, GST Return, PF/ESI payments for businesses which needs to be filled every year. This return includes information on earnings and expenditures of that particular business. It further includes information of Assets and liabilities of a business.

Tax returns permit tax payers to calculate the tax payments schedule, tax liability and tax refund in in case of overpayment. Different countries have different tax return filing policies and features, but the time frame is commonly on an annual basis. Business tax return for an Businesses business or a company with an income in par or more than the exempted limit as specified by government must file taxes annually. Income includes wages, interests, dividends, capital gains, and profit. This documentation is filed with a taxing authority following the guidelines.

For filling Business tax return logon to https://www.incometax.gov.in/iec/foportal.

Due Date for Business Tax filing

  1. Due Date for Business Tax filing is 31st July, 2022 for F.Y. 2021-22 & A.Y. 2022-23.
  2. In case Audit ( Tax Audit/Statutory Audit or any other audit as per applicable law) is applicable on business, due date for business tax filing is 30th Sept, 2022 F.Y. 2021-22 & A.Y. 2022-23.
  3. In case of Transfer Pricing Report, due date for business tax filing is 30th Nov, 2022 F.Y. 2021-22 & A.Y. 2022-23.

Benefits of Business Tax filing

Key benefits for business tax filing return by Salaried Individual are:

  1. Businesses can claim refunds of TDS/TCS
  2. Businesses can carry-forward losses from shares, house property, business (if any)
  3. Businesses can submit the same as supporting loan documents
  4. Businesses can avoid penalties, interest charges, if any.

Definition of “Person” as per Income Tax

As per Section 2(31) of Income Tax Act, 1961, person includes Individual, Hindu undivided Family (HUF), company, firm, LLP, Association of Person (AOP) or Body of Individuals (BOI), local authority & Artificial Judicial Person (AJP).

All the above type of persons can carry businesses in any of the above categories. Point to be noted is that an AOP or BOI shall be deemed to be a person, whether or not, it was formed or established or incorporated with the object of deriving income, profits or gains. Trust if created for charitable/religious purposes are allowed various benefits under the Income Tax Act under section 11.

Business tax filing has to be done by all types of persons as per above definition. The Applicable slab rates & tax rates including surcharge and cess has been discussed below in the article.

ITR Forms which can be used for business tax filing

Business tax filing of return would require businesses to select the form which would be applicable to them based on sources of income and type of business. ITR Forms applicable which can be used by business are as follows:

  1. ITR – 3:  ITR-3 can be filled by person if ITR-1,2 & 4 are not applicable to him. ITR -3 can be filed by individuals and HUF having gains from business & profession. He can have Income from Salary. No limit on number of house properties and agriculture income.
  2. ITR – 4: Individuals or HUF with a total Income of up to INR 50,00,000 having income from salaries, one house property, other sources, and agricultural income up to Rs.5,000 and have income from business & profession computed on presumptive taxation basis under section 44AD/ 44ADA/ 44E.
  3. ITR – 5 – This form can be used by Firm, LLP AOP, BOI, AJP, Local Authority Representative Assessee referred to in Section 160(1)(iii) or (iv), Cooperative Society, Society registered under Societies Registration Act, 1860 or under any other law of any State, Trust other than Trusts eligible to file Form ITR-7, Estate of Deceased Person, Estate of an Insolvent, Business Trusts and Investments Fund.
  4. ITR – 6 – The Form can be used by Domestic Companies not claiming exemption under Section 11 & Foreign Companies.
  5. ITR – 7 – This form can be used by:
    1. Companies who are required to file return as per Section 139(4A)
    2. Every person whose income is derived from property held under trust or other legal obligation wholly for charitable or religious purposes or of income related to voluntary contributions – Section 139(4A)
    3. Chief Executive Officer of Political Party – Section 139(4B)
    4. Research Association – Section 139(4C)
    5. News Agency – Section 139(4C)
    6. Education Institution, College or University, Hospital – Section 139(4D)
    7. Local Authority
    8. Other category of person whose income is unconditionally exempt Under Section 10

Who cannot use ITR – 4

  1. Person who is Director in any company
  2. Person who has held any unlisted equity shares at any time during the previous year 
  3. Person who has any asset (including financial interest in any entity) located outside India 
  4. Person who has signing authority in any account located outside India 
  5. Person who has income from any source outside India 
  6. Person whose tax has been deducted u/s 194N 
  7. Person whose ESOP payment or deduction of tax has been deferred
  8. Person who has brought forward loss or loss to be carried forward under any income head

Who cannot use ITR – 5

  1. Every person whose income is derived from property held under trust or other legal obligation wholly for charitable or religious purposes or of income related to voluntary contributions – Section 139(4A)
  2. Chief Executive Officer of Political Party – Section 139(4B)
  3. Research Association – Section 139(4C)
  4. News Agency – Section 139(4C)
  5. Mutual Funds
  6. Securitization Trust
  7. Investor Protection Fund
  8. Core Settlement guarantee fund
  9. Infrastructure Debt Fund
  10. Education Institution, College or University, Hospital – Section 139(4D)

Perquisites of business tax filing

Pre-requisite data which a business would require before business tax filing are as follows:

  1. User must be registered on e-filing portal.
  2. Link Aadhaar Number and PAN on e-filing portal in case of proprietorship, add authorized signatory details and validate Digital Signature Certificate for that signatory
  3. It is mandatory to have at least one pre-validated bank account
  4. Nominate pre-validated bank account for refund
  5. Books of Accounts (Balance Sheet & Profit & Loss Account including Schedule of Fixed Assets and other relevant Schedules)
  6. Interest Certificates from the Post offices and Banks
  7. Download Form 26AS and Annual Information Statement
  8. Loan statements from the NBFC or the Bank
  9. Bank Account Statements for relevant period
  10. Creditor/Debtor/Stock Confirmation

Slab Rate for Individuals FOR F.Y. 2021-22 & A.Y. 2022-23 are

Individuals being one of the type of Person as per Income, have to do business tax filling.

For details article on slab rates of individuals refer link>> https://www.taxledgeradvisor.com/salaried-tax-filing/

Tax Rate for Partnerships/LLP FOR F.Y. 2021-22 & A.Y. 2022-23 are

Partnerships/LLPs being a type of Person as per Income, have to do business tax filling. Applicable tax rates are:-

  1. For the AY 2022-23, a Partnership Firm (including LLP) is taxable at 30% along with surcharge & cess.
  2. Surcharge is levied @12% on the amount of income tax if Total Income exceeds 1 crore.
  3. Health & Education cess @4% shall also be paid on the amount of income tax plus Surcharge (if any).
  4. Marginal Relief available, in case Net Income exceeds ₹ 1 crore, the amount payable as income tax and Surcharge shall not exceed the total amount payable as income tax on Total Income of ₹ 1 crore by more than the amount of income that exceeds ₹ 1 crore

Slab Rate for AOP/BOI/AJP FOR F.Y. 2021-22 & A.Y. 2022-23 are

AOP/BOI/AJP being a type of Person as per Income, have to do business tax filling. Applicable tax rates are:-

AOP/BOI/AJP Total IncomeTax Rate
Up to 2,50,000Nil
2,50,000 – 5,00,0005%
5,00,000 – 10,00,00012,500 + 20% above INR 5,00,000
Above 10,00,000112,500 + 30% above INR 10,00,000
Slab Rate for AOP/BOI/AJP FOR F.Y. 2021-22 & A.Y. 2022-23

However, taxation of AOP/BOI has to checked on further conditions which are given below:

Nature of AOP/BOIAOP/BOI Assessment
Shares of members of AOP/BOI determinedWhere income of all of the members does not exceeds basic exemption limit, income of AOP / BOI shall be taxable as per slab rates given in above table.
 If income exceed than taxed at Maximum Marginal Rate (i.e., 30% plus surcharge and HEC as applicable).
 But if total income of any member of AOP / BOI is taxable at a rate higher than Maximum Marginal Rate, then income of AOP / BOI shall be chargeable to tax as follows:
Portion of income attributable to such member shall be taxable at such high rate as applicable to that member
Balance portion of income shall be taxable at the Maximum Marginal Rate of tax
Shares of members of AOP/BOI not determinedIncome is assessed at Maximum Marginal Rate. However, if total income of any member is assessed at a rate higher than Maximum Marginal Rate, income of AOP / BOI is assessed at that higher rate.
Further Condition to check before applying tax rate on AOP/BOI
  1. Income Tax Surcharge is levied on the amount of income tax at following rates if total income exceeds specified limits:
    • 10% – Taxable income above INR 50 lakh – Up to ₹ 10 crore
    • 15% – Taxable income above INR 1 crore – Up to ₹ 2 crore
    • 25% – Taxable income above INR 2 crore – Up to ₹ 5 crore
    • 37% – If taxable income above INR 5 crore
  2. Maximum Surcharge on income u/s 111A, 112A and 115AD is 15%
  3. Income Tax Health & Education cess @4% shall also be paid on the amount of income tax plus Surcharge (if any).
  4. Income Tax Marginal Relief available of Surcharge, the amount payable as Surcharge shall not exceed the income earned exceeding INR 50 lakh, 1 crore, 2 crores & 5 crores as the case may be.

Please Note : An AOP / BOI who’s adjusted total income exceeds ₹ 20 lakh shall be liable to pay Alternate Minimum Tax (AMT) at 18.5% of adjusted total income (plus surcharge and Health and Education cess as applicable), where the normal tax liability is less than 18.5% of adjusted total income.

Tax Rate for Local Authority for F.Y. 2021-22 & A.Y. 2022-23 are

Local Authority being a type of Person as per Income, have to do business tax filling. Applicable tax rates are:-

  1. For the AY 2022-23, a Local Authority is taxable at 30% along with surcharge & cess.
  2. Income Tax Surcharge is levied @12% on the amount of income tax if Total Income exceeds 1 crore.
  3. Income Tax Health & Education cess @4% shall also be paid on the amount of income tax plus Surcharge (if any).
  4. Income Tax Marginal Relief available of Surcharge, In case Net Income exceeds ₹ 1 crore – the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of ₹ 1 crore by more than the amount of income that exceeds ₹ 1 crore.

Tax Rate for Domestic Companies for F.Y. 2021-22 & A.Y. 2022-23 are

Domestic Companies being a type of Person as per Income, have to do business tax filling. Applicable tax rates are:-

ParticularsTax Rate
Turnover or Gross Receipt in previous year 2018-19 not exceed ₹ 400 crores25%
If opted for Section 115BA25%
If opted for Section 115BAA22%
If opted for Section 115BAB15%
Any other Domestic Company30%
Tax Rate for Domestic Companies FOR F.Y. 2021-22
  1. Income Tax Surcharge is levied on the amount of income tax at following rates if total income exceeds specified limits:
    • 7% – Taxable income above ₹ 1 crore– Up to ₹ 10 crore
    • 12% – Taxable income above ₹ 10 crore
    • 10% – If Company opting for taxability u/s 115BAA or Section 115BAB
  2. Income Tax Health & Education cess @4% shall also be paid on the amount of income tax plus Surcharge (if any).
  3. Income Tax Marginal Relief available of Surcharge, the amount payable as Surcharge shall not exceed the income earned exceeding INR 1 crore & 10 crores.

Tax Rate for Foreign Companies for F.Y. 2021-22 & A.Y. 2022-23

Foreign Companies being a type of Person as per Income, have to do business tax filling. Applicable tax rates are:-

  1. For the AY 2022-23, a Foreign Company is taxable at 40%.
  2. Income Tax Surcharge is levied on the amount of income tax at following rates if total income exceeds specified limits:
    • 2% – Taxable income above INR 1 crore – Up to INR 10 crores
    • 5% – Taxable above INR 10 crore
  3. Income Tax Health & Education cess @4% shall also be paid on the amount of income tax plus Surcharge (if any).
  4. Income Tax Marginal Relief available of Surcharge, the amount payable as Surcharge shall not exceed the income earned exceeding INR 1 crore & 10 crores.

Need Expert Assistance for Business tax filing

For expert assistance on ITR-3 return filling in Udaipur and Rajasthan, reach our professionals at Tax Ledger Advisor.