Business Tax Filing — Income Tax Return for Companies, LLPs & Firms

Business Tax Filing — Income Tax Return for Companies, LLPs, and Firms

Every business in India — whether a private limited company, a public limited company, a Limited Liability Partnership, a partnership firm, or a sole proprietorship — is required to file an income tax return each year on the income tax portal at incometax.gov.in. Business tax filing is more complex than individual return filing: the correct ITR form must be selected for the business structure, GST turnover must be reconciled with income declared, advance tax must be computed and paid in four instalments, tax audit under Section 44AB may be mandatory, and key deductions must be correctly computed and claimed. Getting any one of these elements wrong invites income tax notices, interest under Sections 234A, 234B, and 234C, and penalties that can be avoided with proper compliance.

N D Savla & Associates, Chartered Accountants based in Mumbai, provides comprehensive business tax filing services for private limited companies, public limited companies, LLPs, partnership firms, and sole proprietors across industries — manufacturing, trading, IT services, real estate, healthcare, hospitality, and professional services. Our team handles the complete business tax filing cycle: finalising accounts and reconciling with GST returns, computing taxable income and allowable deductions, preparing the tax audit report in Form 3CA/3CB and Form 3CD, filing the income tax return in the applicable form (ITR-6, ITR-5, ITR-3, or ITR-4), computing and advising on advance tax, assessing the applicability of MAT or AMT, and responding to any notices arising from the filing. We also conduct proactive Tax Health Check reviews for business clients to identify and address compliance gaps before the Income Tax Department raises them.

Business tax filing is not a one-month exercise — it requires year-round financial discipline. Advance tax instalments are due in June, September, December, and March. TDS must be deducted, deposited, and reported quarterly. Books of accounts must be maintained in a manner that supports both GST compliance and income tax audit. The annual income tax return is the culmination of 12 months of compliance work, and errors in that underlying work inevitably show up in the return. N D Savla & Associates' Virtual CFO service provides year-round financial management that keeps business clients audit-ready, tax-optimised, and compliant throughout the year.

Which ITR Form Does Your Business Need to File?

Selecting the correct income tax return form is the first critical decision in business tax filing. The Income Tax Act prescribes different ITR forms for different business structures, and using the wrong form invalidates the return. Here is the complete guide to ITR form selection for business taxpayers:

ITR-6 — For Private and Public Limited Companies

All companies incorporated under the Companies Act, 2013 (or the Companies Act, 1956) — other than companies claiming exemption under Section 11 of the Income Tax Act (i.e., charitable companies, which file ITR-7) — must file their income tax return in ITR-6. This covers private limited companies, public limited companies, One Person Companies (OPCs), Section 8 companies (not claiming Section 11 exemption), and foreign companies with a permanent establishment in India. ITR-6 is the most comprehensive income tax return form, covering computation of company income under all heads, depreciation schedules, carry-forward of losses, MAT computation, deductions under Chapter VI-A, and international transaction disclosures. All companies must get their accounts audited under the Companies Act; they must also separately comply with Section 44AB income tax audit requirements.

ITR-5 — For Partnership Firms, LLPs, and AOPs

Partnership firms, Limited Liability Partnerships (LLPs), Associations of Persons (AOPs), Bodies of Individuals (BOIs), and certain other non-company entities file their income tax return in ITR-5. ITR-5 covers all heads of income applicable to these entities, partner remuneration and interest computation under Section 40(b), carry-forward of business losses, AMT computation, and relevant deductions. Partnership firms and LLPs pay income tax at a flat rate of 30% on their net income, plus applicable surcharge and cess. Partners are then exempt from income tax on their share of firm income, but interest and remuneration received from the firm is taxable in the partner's individual return.

ITR-3 — For Proprietors, Partners Having Business Income, and Professionals

An individual or HUF having income from business or profession — other than those who qualify for the presumptive scheme under ITR-4 — must file ITR-3. This includes sole proprietors of trading or manufacturing businesses, individual professionals (lawyers, doctors, architects, consultants) with gross receipts above Rs. 75 lakh, partners who receive salary or remuneration from a firm, and individuals with speculative business income. ITR-3 requires computation of income under the head Profits and Gains from Business or Profession (PGBP), including depreciation, all allowable expenditure, and applicable deductions.

ITR-4 (Sugam) — For Presumptive Taxation Scheme Filers

Individuals, HUFs, and firms (other than LLPs) whose income from business is declared under the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE can use the simplified ITR-4 (Sugam) form. ITR-4 is significantly shorter than ITR-3 and does not require detailed income computation or books of accounts. However, eligibility for ITR-4 is subject to the presumptive taxation conditions — including turnover limits and the requirement to declare income at the deemed profit percentage or higher.

Tax Audit Under Section 44AB — Is It Mandatory for Your Business?

Section 44AB of the Income Tax Act requires certain categories of businesses and professionals to get their accounts audited by a Chartered Accountant before the income tax return is filed. The tax audit report, filed in Form 3CA (for entities already subject to audit under other laws) or Form 3CB (for entities not otherwise required to be audited) along with the detailed Form 3CD statement of particulars, must be submitted on the income tax portal at incometax.gov.in before the income tax return filing. Our dedicated Income Tax Audit page covers this in comprehensive detail.

Turnover Thresholds for Section 44AB Tax Audit

The following categories of business are required to get accounts audited under Section 44AB:

• Business (other than eligible for presumptive scheme under Section 44AD): if total sales, turnover, or gross receipts exceed Rs. 1 crore in the previous year (threshold raised to Rs. 10 crore if cash receipts and payments each do not exceed 5% of total receipts/payments during the year)
• Profession: if gross receipts exceed Rs. 50 lakh in the previous year
• Business opting out of presumptive scheme under Section 44AD: if taxable income is declared below the deemed profit rate, the assessee must maintain books of accounts and get them audited regardless of turnover
• Business or profession opting out of Section 44ADA presumptive scheme with receipts below Rs. 75 lakh but income below 50% of receipts
• Any business or profession specifically directed to get accounts audited under any other provision of the Income Tax Act

What the Tax Audit Involves — Form 3CD Compliance

The tax audit under Section 44AB requires a Chartered Accountant to examine the business's books of accounts, financial statements, and tax computation, and to certify specific particulars in Form 3CD — a detailed, 44-clause statement that covers: method of accounting used; changes in accounting method; income computation under each head; allowable and disallowable expenditure; TDS compliance; related-party transactions; payments exceeding Rs. 20,000 in cash (Section 40A(3)); unpaid liabilities at year-end (Section 43B); loans and deposits above Rs. 20,000; transfer pricing; and dozens of other compliance items. The Form 3CD is then cross-checked by the CPC against the income tax return, and discrepancies generate Section 143(1)(a) prima facie adjustment notices. Our tax audit team ensures that every Form 3CD disallowance is correctly incorporated in the income computation before the return is filed.

Advance Tax — Computation, Due Dates, and Consequences

Advance tax is the income tax paid in advance during the financial year in which income is earned, rather than after the year-end. Every business — company, LLP, firm, or proprietorship — with an estimated tax liability exceeding Rs. 10,000 for the year must pay advance tax in instalments during the financial year. Failure to pay adequate advance tax attracts interest under Sections 234B and 234C of the Income Tax Act.

Advance Tax Instalment Schedule for Businesses

The advance tax payment schedule for companies and all other taxpayers (except those covered by the presumptive scheme) is:

• On or before June 15 of the financial year: at least 15% of advance tax payable
• On or before September 15 of the financial year: at least 45% of advance tax payable (cumulative)
• On or before December 15 of the financial year: at least 75% of advance tax payable (cumulative)
• On or before March 15 of the financial year: 100% of advance tax payable

Computing Advance Tax for Your Business

Advance tax is computed on estimated income for the full financial year. For a business, this requires estimating: total expected turnover or revenue for the year; expected allowable business expenditure; applicable depreciation; expected deductions under Chapter VI-A; and any carry-forward losses from earlier years. The resulting net estimated income, after deducting TDS already suffered, is the base for computing the advance tax liability. Given the difficulty of precisely estimating full-year income mid-year, businesses often use the previous year's tax liability as a starting point and adjust for known changes in business scale.

Interest Under Sections 234B and 234C

Where advance tax paid is less than 90% of the assessed tax for the year, interest under Section 234B is levied at 1% per month from April 1 of the assessment year until the date of payment of tax. Where advance tax is not paid in the instalments prescribed — even if the full amount is ultimately paid before March 15 — interest under Section 234C is levied at 1% per month for the period of shortfall in each instalment. Section 234C interest cannot be avoided by paying all tax by March 31; the instalment schedule must be followed throughout the year.

Presumptive Taxation — Sections 44AD, 44ADA, and 44AE

The presumptive taxation scheme under Sections 44AD and 44ADA is one of the most significant simplifications in Indian business income tax compliance. It allows eligible businesses and professionals to declare income at a prescribed deemed profit rate without maintaining detailed books of accounts or getting accounts audited.

Section 44AD — For Eligible Businesses

Section 44AD applies to eligible assessees — individuals, HUFs, and partnership firms (excluding LLPs) — carrying on any business other than those specifically excluded. The scheme allows the business to declare income at 8% of total turnover or gross receipts (or 6% for amounts received through banking channels, cheque, or online modes) as the presumptive profit, without maintaining any books of accounts and without any Section 44AB tax audit requirement. The scheme is available if:

• Total turnover or gross receipts do not exceed Rs. 3 crore in the financial year (if aggregate cash receipts do not exceed 5% of total receipts; otherwise the limit is Rs. 2 crore)
• The business is not a profession (covered under Section 44ADA instead)
• The business is not one of the excluded categories: plying/hiring/leasing goods carriages (Section 44AE), agency business, commission or brokerage income

A business that opts for Section 44AD must continue under the scheme for at least 5 consecutive years. If it opts out before 5 years, it cannot re-enter the scheme for 5 years and must maintain books and get tax audit for those 5 years.

Section 44ADA — For Professionals

Section 44ADA extends the presumptive scheme to specified professionals: legal professionals, medical professionals, engineers, architects, accountants, technical consultants, interior decorators, and other CBDT-notified professions. Professionals with gross receipts not exceeding Rs. 75 lakh in the financial year (or Rs. 50 lakh if the limit has not been enhanced for that year) can declare 50% of gross receipts as presumptive income. No books of accounts need to be maintained, and no Section 44AB tax audit is required. Any income declared above 50% of gross receipts is also acceptable.

New Tax Regime for Businesses — Sections 115BAA, 115BAB, and 115BAC

The new tax regime for businesses, introduced progressively from 2019, offers significantly lower tax rates in exchange for giving up most deductions and exemptions. Unlike individuals (who can switch between old and new regimes annually unless they have business income), companies and partnership firms that opt for the new concessional rate schemes generally cannot revert to the old regime.

Section 115BAA — For Domestic Companies (22% Flat Rate)

Section 115BAA allows domestic companies to opt for a flat 22% income tax rate (plus 10% surcharge and 4% cess = effective rate of ~25.17%). Companies opting for Section 115BAA must give up all exemptions, deductions, and carry-forward of losses. This includes depreciation claims beyond the normal rate, Chapter VI-A deductions, MAT credit, and carry-forward of unabsorbed depreciation. The option, once exercised in Form 10-IC, is irrevocable. Section 115BAA is most beneficial for companies with high taxable income and limited deductions — the effective 25.17% rate against the otherwise applicable 30%+ for large companies is a significant saving.

Section 115BAB — For New Manufacturing Companies (15% Rate)

Section 115BAB allows new domestic manufacturing companies incorporated on or after 1 October 2019 and commencing manufacturing on or before 31 March 2024 to opt for a 15% income tax rate (effective rate ~17.01%). The conditions are stringent: the company must not be formed by splitting up or reconstruction of an existing business; must not use machinery or plant previously used for any purpose; and must not carry on any business other than manufacturing. Section 115BAB offers the lowest corporate tax rate in India and has attracted significant new manufacturing investment.

Section 115BAC — For Individual Proprietors and Partner Individuals

Section 115BAC is the new tax regime for individuals and HUFs, applicable to proprietors who have business income as well as to partners in their individual capacity. Under Section 115BAC, individuals can opt for reduced income tax slab rates (ranging from nil to 30% under the new regime) but must give up HRA exemption, LTA, most deductions under Chapter VI-A (except Section 80CCD(2)), and the standard deduction on business income. Unlike companies, individuals with business income can revert between old and new regimes only once. The new regime has become the default regime from AY 2024-25; individuals who wish to use the old regime must file Form 10-IEA to opt out.

GST-ITR Reconciliation — The Most Critical Business Tax Filing Task Today

GST-ITR reconciliation is the single most important preparatory step in business tax filing since the introduction of the Annual Information Statement. Every company's, LLP's, and firm's GSTIN-level turnover data from GSTR-1 and GSTR-9 filings is now available to the Income Tax Department through AIS integration. Where the GST-declared turnover significantly differs from the income tax return-declared turnover, the CPC's system flags the discrepancy and generates notices — either Section 143(1)(a) prima facie adjustment notices for processing-stage mismatches or scrutiny selection for more complex differences.

Differences between GST turnover and income tax turnover are common and often legitimate:

• GST turnover may include exempted supplies (agricultural produce, financial services) not included in income tax business income
• Export of services under GST may be zero-rated but still included in GST turnover; the corresponding income may be classified differently in the income tax return
• GST invoicing basis may differ from income recognition basis under income tax (e.g., percentage of completion method in real estate vs. invoice-based GST)
• Intra-group transactions between related parties may create GST turnover without corresponding income tax revenue
• Advances received under GST (which are taxable under GST at the time of receipt) may not yet be recognized as income under income tax

Every such difference must be identified, documented, and ready to explain before the income tax return is filed. N D Savla & Associates prepares a formal GST-ITR reconciliation statement for every business tax filing client, quantifying each difference with documentary support. This statement is then available as the first response if the CPC raises a query.

Key Deductions Available in Business Tax Filing

The Income Tax Act provides a comprehensive range of deductions for business income computation. These deductions reduce the taxable income of the business and must be correctly claimed and supported with documentation. The major deduction categories for business taxpayers are:

Sections 30 to 37 — General Business Expenditure

Sections 30 to 37 of the Income Tax Act allow deduction of all genuine business expenditure incurred wholly and exclusively for the purpose of the business. The key provisions include:

• Section 30: Rent, rates, taxes, repairs, and insurance for business premises
• Section 31: Repairs and insurance of plant, machinery, and furniture
• Section 32: Depreciation on block of assets — building, plant, machinery, furniture, and intangibles — at prescribed rates; additional 20% first-year additional depreciation for new plant and machinery in manufacturing
• Section 35: Expenditure on scientific research — payment to research associations; 100% (formerly weighted) deduction on in-house research
• Section 36: Specific deductions including insurance premiums for employees, interest on capital borrowed for business, bad debts written off, employer contributions to recognised provident fund and approved gratuity fund
• Section 37(1): General deduction for any revenue expenditure laid out wholly and exclusively for business purposes — this is the residual provision covering all business costs not specifically addressed by Sections 30–36

Section 43B — Deductions Only on Actual Payment

Section 43B requires certain specified expenditures to be allowed as deductions only in the year of actual payment, regardless of the accounting year in which they are accrued. This prevents tax deductions on accrued but unpaid liabilities. The expenditures covered by Section 43B include: government taxes and duties; employer contributions to PF, ESI, and approved funds; interest on borrowings from financial institutions (after the Finance Act, 2023 amendment, now also covers MSME payments); bonus and commission; leave encashment; and payments to railways. Where such amounts are unpaid at year-end, they must be added back in the Form 3CD computation and will be deductible only when actually paid.

Section 40A(3) — Cash Payment Disallowance

Section 40A(3) disallows as business expenditure any payment (other than to banking institutions) exceeding Rs. 10,000 (Rs. 35,000 for payment to transporters) made otherwise than by account payee cheque, demand draft, or electronic clearing. This disallowance is one of the most common Form 3CD disclosures and one of the most frequently recurring Form 3CD-triggered income tax notices for business taxpayers.

Chapter VI-A Deductions for Businesses

For businesses under the old tax regime, businesses can also claim deductions under Chapter VI-A, including: Section 80G for donations to approved charitable institutions; Section 80GGA for scientific research donations; Section 80IC/80IE/80IB for specified industrial undertakings in economically backward areas; Section 80JJAA for employment of new employees; and Section 80QQB/80RRB for royalty income from books and patents.

Minimum Alternate Tax (MAT) for Companies

Minimum Alternate Tax (MAT) under Section 115JB of the Income Tax Act is a special tax mechanism that ensures companies — particularly those with high accounting profits but low taxable income (due to large deductions, exemptions, or carry-forward losses) — pay at least a minimum amount of income tax.

How MAT Works

Under Section 115JB, if a company's tax payable under normal income tax provisions (on taxable income) is less than 15% of its book profits (for financial years before AY 2024-25, 18.5% was applicable; since Finance Act, 2019, the rate is 15%), the company must pay MAT at 15% of book profits. Book profits are computed from the net profit as per the profit and loss account prepared under the Companies Act, with specific adjustments prescribed under Section 115JB(2) — adding back provisions for bad debts, income tax paid, transfers to reserves, dividends paid, depreciation, and deductions claimed under various provisions.

MAT Credit Carry-Forward

Where a company pays MAT in a year (because its normal tax is lower than MAT), the excess of MAT over the normal tax is available as MAT credit under Section 115JAA. This MAT credit can be carried forward for 15 years and set off against the normal tax liability in subsequent years when the normal tax exceeds MAT. MAT credit tracking is an important part of the company's income tax return and must be maintained carefully across years.

Alternate Minimum Tax (AMT) for Non-Corporate Entities

Alternate Minimum Tax (AMT) under Section 115JC applies to non-corporate entities — individuals, HUFs, firms, LLPs, and AOPs — that have claimed certain deductions (particularly under Sections 10AA, 35AD, and Chapter VI-A provisions like 80H to 80RRB). AMT is computed at 18.5% of adjusted total income. Similar to MAT, AMT credit can be carried forward and set off in years when regular tax exceeds AMT.

Business Tax Filing Due Dates — Complete Calendar

Business tax filing has multiple deadlines across the financial year. Missing any of them has specific consequences:

• March 15 (Financial Year End): Final advance tax instalment — 100% of estimated tax liability. Pay via challan ITNS-280 through the income tax portal.
• April 30: TDS return (Form 24Q/26Q/27Q) for the fourth quarter (January–March). Also: TCS return (Form 27EQ) for Q4.
• July 31: Due date for filing income tax return for businesses not requiring audit (ITR-4 for presumptive scheme) and for individuals without business income. Extended by CBDT in most years.
• September 30: Tax audit report (Form 3CA/3CB and 3CD) due date. Must be filed BEFORE the income tax return.
• October 31: Income tax return due date for businesses requiring audit under Section 44AB (ITR-3, ITR-5, ITR-6). Also: income tax return for companies and LLPs. Filing after this date attracts Rs. 5,000 penalty under Section 234F.
• November 30: Income tax return for businesses with international or specified domestic transactions requiring a Transfer Pricing Report in Form 3CEB (ITR-6 with transfer pricing).
• December 31: Last date to file belated income tax returns or revised returns for the assessment year (under Section 139(4) and 139(5) respectively).

Why Choose N D Savla & Associates for Business Tax Filing?

Business tax filing is not a form-filling exercise — it is the culmination of a year of financial management, accounting discipline, and tax planning. N D Savla & Associates brings the full depth of this to every business tax filing engagement.

Integrated Tax Audit and Return Filing

We handle the Section 44AB tax audit and the income tax return filing as an integrated engagement. The same team that conducts the Income Tax Audit and prepares Form 3CD also prepares and files the income tax return — ensuring perfect consistency between the audit report and the return. No client has ever received a Section 143(1)(a) notice for a Form 3CD-ITR mismatch when both are handled by us.

GST-ITR Reconciliation as Standard Service

Every business tax filing we handle includes a comprehensive GST-ITR reconciliation — turnover, taxable and exempt supply distinction, export income, and advance receipt treatment. This reconciliation is documented and available as the immediate response if the Income Tax Department's CPC raises any query on the turnover difference. This proactive approach has prevented numerous notices for our business clients.

Advance Tax Planning and Advisory

We compute advance tax liability for every business client at the start of the financial year and again after each quarter's results are available. We advise on the optimal instalment amounts to avoid Section 234C interest while managing cash flow. For companies approaching the MAT threshold, we advise on timing of deductions and investments to optimise the MAT/normal tax balance.

New Tax Regime Evaluation

For companies, we evaluate the Section 115BAA vs. old regime tax impact for every new company client and for existing clients when the business profile changes (significant deduction phase-out, change in depreciation base, expiry of carry-forward losses). The wrong regime choice can cost a company lakhs in avoidable tax. Our analysis is based on the client's actual deduction profile rather than a generic comparison.

TDS Compliance Integration

Business tax filing is inseparable from TDS compliance. Our TDS Return Filing service handles all quarterly TDS returns for business clients — Form 24Q for salary TDS, Form 26Q for non-salary domestic payments, and Form 27Q for payments to non-residents. Accurate, timely TDS returns ensure that the TDS credits reflected in the business's vendors' Form 26AS are correct, preventing TDS-related disputes in assessment.

Frequently Asked Questions About Business Tax Filing