ITR Filing
Brief about ITR Filing
Income Tax Return (ITR) is a prescribed form through which the particulars of income earned by a person in a financial year and taxes paid on such income are communicated to the Income-tax Department.
It is mandatory to file ITR for individuals If the total Gross Income is over Rs.3,00,000 in a financial year (Including standard deduction). This limit exceeds Rs.3,00,000 for senior citizens and Rs.5,00,000 for super senior citizens.
In the case of non-filing of tax returns, income tax authorities will hold the view that the motive was tax evasion. For failing to file an income tax return, you could face imprisonment for a period ranging from six months to seven years, as per the rules of Section 276CC of the Income Tax Act.
Importance of ITR Filing for the organisation
Setting up a business and understanding the complexities involved in filing returns is an important aspect of running a business.
A business tax return is basically an income tax return. The return is a statement of income and expenditure of the business. Also, any tax to be paid on the profits made by you is declared in this return. The return also contains details of the assets and liabilities held by the business. Items like fixed assets, debtors and creditors of business, loans taken and loans that were given are declared here.
It is mandatory to file ITR for a company or a firm, irrespective of whether you have profit or loss. It is mandatory to file ITR for a foreign company which has been taking treaty benefit on any transaction made in India.
Filing of return mainly depends on the type of business structure. For example:
If you are a sole proprietor, your business income and other personal incomes such as a salary, income from house property, and interest income have to be stated on the same return.
If your total income before deductions is above the basic taxable limit you need to compulsorily file your income tax return irrespective of profit or loss in your business.
The basic taxable limit is Rs. 2.5 lakh. So, if your income before deductions is above Rs 2.5 lakh you need to file your business tax return.
For companies, firms and Limited Liability Partnership (LLP) a business tax return has to be filed irrespective of profit or loss. Even if there are no operations undertaken, a return has to be filed.
Companies, firms, and LLPs are taxed at a rate of 30%.
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Pros & Cons of the Service
Pros
Filing an Income tax return helps you carry forward or set off your losses. Filing of the Income-tax return helps not only you but the nation as well. The tax that you pay is used by the government to build infrastructure and to improve other facilities of the nation such as medical, defence, etc
Cons
The short window in which taxpayers can submit their returns is another drawback of ITR U. Failure to submit tax returns by the AY’s end can result in a fine of up to Rs. 10,000. In addition, taxpayers who use this provision on their returns may miss out on tax benefits.