Businesses in India are actively preparing for and filing their Income Tax Returns (ITR) for the Financial Year 2024-25 (Assessment Year 2025-26). The process is conducted entirely online through the Income Tax Department’s e-filing portal.
Key Concepts for Business Income Tax Filing
Financial Year (FY)
The period for which income is earned. For current filing, this is FY 2024-25 (April 1, 2024, to March 31, 2025).
Assessment Year (AY)
The year immediately following the financial year, in which the income earned in the financial year is assessed. For income earned in FY 2024-25, the Assessment Year is 2025-26.
Tax Audit
A mandatory audit of accounts for certain businesses and professionals exceeding specified turnover/gross receipts limits.
Presumptive Taxation Scheme
A simplified scheme for small businesses and professionals where income is deemed at a certain percentage of turnover/gross receipts, reducing the need for detailed bookkeeping.
Important Due Dates for FY 2024-25 (AY 2025-26)
The Central Board of Direct Taxes (CBDT) has announced some extensions for the current filing season.
For Businesses not requiring Audit (e.g., small proprietorships, some partnership firms opting for presumptive taxation)
The due date for filing ITR for FY 2024-25 (AY 2025-26) has been extended from July 31, 2025, to September 15, 2025.
For Businesses requiring Audit (e.g., Companies, LLPs, larger proprietorships/partnership firms)
- Due Date for Tax Audit Report (Form 3CA-3CD / 3CB-3CD): September 30, 2025.
- Due Date for Filing ITR: October 31, 2025.
Businesses requiring Transfer Pricing Reports (in case of international/specified domestic transactions)
- Due Date for Report under Section 92E: October 31, 2025.
- Due Date for Filing ITR: November 30, 2025.
Belated or Revised Return for FY 2024-25
December 31, 2025 (with applicable penalty and interest).
Updated Return (ITR-U) for FY 2023-24
December 31, 2025. (Extended from previous 24 months to 48 months for certain AYs).
Penalties for Late Filing (Section 234F)
- Up to ₹1,000 if total income is up to ₹5 lakh.
- ₹5,000 if total income exceeds ₹5 lakh.
- Interest under Section 234A at 1% per month on the unpaid tax amount from the original due date until the date of filing.
Applicable ITR Forms for Businesses
The ITR form depends on the legal structure and income nature of the business:
ITR-3
For individuals and HUFs having income from business or profession (not opting for presumptive taxation). This is typically used by proprietorships that do not choose the presumptive scheme or exceed its limits.
ITR-4 (Sugam)
For resident individuals, HUFs, and Firms (other than LLP) having total income up to ₹50 lakh and having income from business and profession computed under the presumptive taxation scheme (Section 44AD, 44ADA, 44AE).
ITR-5
For Firms (Partnership Firms), Limited Liability Partnerships (LLPs), Association of Persons (AOPs), Body of Individuals (BOIs), etc.
ITR-6
For Companies other than those claiming exemption under Section 11 (income from property held for charitable or religious purposes).
ITR-7
For persons including companies required to furnish return under Section 139(4A) (charitable/religious trusts), 139(4B) (political parties), 139(4C) (certain institutions), or 139(4D) (universities, colleges, etc.).
Documents Required for Business ITR Filing
- PAN Card (of the business entity and key individuals/partners/directors).
- Aadhaar Card (for proprietor/partners/directors).
- Bank Statements: For all business bank accounts.
- Books of Accounts: Depending on the business type and turnover:
- Profit & Loss Account: Showing income and expenses for the financial year.
- Balance Sheet: Showing assets, liabilities, and capital at the end of the financial year.
- Cash Flow Statement: (Mandatory for companies).
- Audit Report (Form 3CD): If a tax audit is applicable.
- TDS Certificates (Form 16A, 26AS): For any TDS deducted on business income.
- TCS Certificates: If any TCS was collected.
- GST Returns: GSTR-1, GSTR-3B (if registered under GST).
- Details of Advance Tax Paid / Self-Assessment Tax Paid.
- Capital Account/Partner’s Capital Account statements.
- Fixed Asset Register (for depreciation calculation).
- Loan Documents: If any business loans.
- Expense Vouchers/Bills: For all business expenses.
- Invoice copies: For sales/revenue.
Business-Specific Tax Considerations and Rates (FY 2024-25)
A. Proprietorship Firms:
Taxed as Individual
A proprietorship is not a separate legal entity. Its income is added to the proprietor’s individual income and taxed at the individual income tax slab rates.
ITR Form
ITR-3 or ITR-4 (if opting for presumptive taxation).
Audit Requirement
- Mandatory if gross receipts from profession exceed ₹50 lakh.
- Mandatory if turnover from business exceeds ₹1 crore (or ₹10 crore if cash transactions are below 5%).
- Mandatory if income declared under presumptive taxation is lower than the prescribed percentage (6% for digital, 8% for cash for business; 50% for professionals) and total income exceeds basic exemption limit.
Presumptive Taxation (Sections 44AD/44ADA)
- 44AD (Business): For businesses with turnover up to ₹2 crore (or ₹3 crore for digital transactions up to 95%). Deemed profit is 6% (digital) or 8% (cash) of turnover.
- 44ADA (Professionals): For professionals with gross receipts up to ₹50 lakh. Deemed profit is 50% of gross receipts.
B. Partnership Firms (including LLPs):
Separate Legal Entity (for tax purposes)
Unlike proprietorships, partnership firms and LLPs are separate entities and are taxed distinctly from their partners.
Tax Rate
Flat 30% on total income.
Surcharge
12% if total income exceeds ₹1 crore. (Marginal relief applies).
Health & Education Cess
4% on income tax + surcharge.
Alternative Minimum Tax (AMT)
Applicable at 18.5% (plus surcharge and cess) of Adjusted Total Income, if the normal tax liability is less than 18.5% of book profit. Credit for AMT paid can be carried forward for 15 assessment years.
Remuneration to Partners
Remuneration and interest on capital paid to partners are deductible expenses for the firm, subject to limits specified under Section 40(b) of the Income Tax Act.
Revised Limits for Partner Remuneration (Effective FY 2025-26, AY 2026-27)
On the first ₹6,00,000 of book profit (or in case of loss): ₹3,00,000 or 90% of book profit, whichever is higher.
- On the remaining book profit: 60% of book profit.
- Note: These revised limits come into effect from April 1, 2025 (AY 2026-27). For FY 2024-25, the old limits apply (first ₹3,00,000 of book profit: ₹1,50,000 or 90% of book profit; remaining book profit: 60% of book profit).
ITR Form
ITR-5.
Audit Requirement
Mandatory if turnover exceeds ₹1 crore (business) or gross receipts exceed ₹50 lakh (profession). Also, if profits are declared lower than the presumptive scheme percentage.
TDS on Payments to Partners (New Section 194T – applicable from FY 2025-26)
A significant change coming from April 1, 2025 (AY 2026-27) is the introduction of Section 194T, which mandates TDS on payments to partners (remuneration, interest) if the amount exceeds ₹20,000 in a financial year. Firms will need to obtain a TAN for this.
C. Companies (Private Limited, Public Limited, OPC):
Separate Legal Entity
Companies are distinct legal entities and are taxed separately.
Separate Legal Entity
Companies are distinct legal entities and are taxed separately.
- Tax Rates (FY 2024-25):
- Domestic Companies:
- 25%: If total turnover or gross receipts in FY 2022-23 did not exceed ₹400 crore.
- 30%: For other domestic companies.
- Concessional Rates (No deductions/exemptions):
- 22% (Section 115BAA): No surcharge if opted.
- 15% (Section 115BAB): For new domestic manufacturing companies incorporated on or after Oct 1, 2019, and commencing manufacturing before Mar 31, 2024. No surcharge if opted.
- Foreign Companies: 35% (reduced from 40% in Budget 2024, effective from April 1, 2024).
- Domestic Companies:
Surcharge
- Domestic Companies:
- 7% if total income > ₹1 crore but ≤ ₹10 crore.
- 12% if total income > ₹10 crore.
- 10% if opting for Section 115BAA or 115BAB.
- Foreign Companies:
- 2% if total income > ₹1 crore but ≤ ₹10 crore.
- 5% if total income > ₹10 crore.
- Domestic Companies:
Health & Education Cess
4% on income tax + surcharge.
Minimum Alternate Tax (MAT)
15% (plus surcharge & cess) on adjusted book profit, if normal tax liability is less than 15% of book profit.
ITR Form
ITR-6.
Audit Requirement
Mandatory for all companies, irrespective of turnover.
General Steps for Business ITR Filing (Online)
Gather Documents
Ensure all necessary financial statements, audit reports (if applicable), TDS/TCS certificates, bank statements, etc., are ready.
Maintain Books of Accounts
Accurately maintain all financial records as per the Income Tax Act and other relevant laws (e.g., Companies Act).
Calculate Income and Tax Liability
Determine the taxable income after considering all allowable expenses, depreciation, and other deductions. Calculate the tax payable.
Pay Advance Tax
Ensure advance tax installments have been paid on time throughout the financial year. Any balance tax can be paid as Self-Assessment Tax before filing.
Obtain Tax Audit Report (if applicable)
If your business requires an audit, get the tax audit report (Form 3CD) prepared and filed by a Chartered Accountant before the ITR filing due date.
Login to E-filing Portal
Access the Income Tax Department’s official e-filing portal (www.incometax.gov.in) using the business’s PAN and password.
Select Correct ITR Form
Choose the appropriate ITR form (ITR-3, ITR-4, ITR-5, or ITR-6) for the Assessment Year 2025-26.
Fill and Upload Details
Enter all required financial details, income from various heads, deductions, and tax payments. Most ITR forms for businesses require data to be filled using offline utilities (Java/Excel) and then uploaded as an XML file.
Attach Audit Report (if applicable)
For audit cases, the audit report is filed separately by the CA, and the acknowledgment number of the audit report filing needs to be mentioned in the ITR.
Review and Submit
Carefully review all entered data for accuracy before submitting the return.
E-Verify the Return
The return must be e-verified. For companies and audit cases, a Digital Signature Certificate (DSC) is mandatory. For other business types, Aadhaar OTP, Net Banking, or EVC can be used. E-verification must be completed within 30 days of filing.
Recommendation: Given the complexities involved in business taxation, especially for audit cases, partnership firms, LLPs, and companies, it is highly recommended to seek assistance from a our qualified tax experts to ensure accurate and compliant filing.