Detailed guide on how to file ITR for a small business


Whether you own a large or small business in India, you must file income tax every year to remain tax compliant. The company’s legitimacy is enhanced by the filing of taxes.

Filing taxes is a once-per-year activity. If you have no past experience, it may appear to be a daunting task, and the entire process must be handled with caution. Even a tiny misstep might lead to a plethora of issues, such as fines and business monitoring. Filing business income tax, on the other hand, becomes simple if you have the essential expertise.

In this article, we’ll go through how to file ITR for small business and what are the documents required for filing ITR for business.

What is ITR filing for businesses?

The ITR for business is a statement of the company’s profits and expenses. In addition, any taxes due on your profits are stated in this return. The return also includes information about the company’s assets and liabilities. Fixed assets, business debtors and creditors, loans taken and loans given are all declared here.

Who must file a business tax return? 

Return filing is mostly determined by the type of business structure. Consider the following scenario:

  • If you are a sole proprietor, your business income and other personal income, such as salary, interest income, and income generated from house rentals, must all be reported on the same tax form.
  • If your total income before deductions exceeds the basic taxable limit, you must file an income tax return regardless of whether your firm is profitable or not.
  • You must file a business tax return if your taxable income prior to deductions exceeds Rs. 2.5 lakh.
  • Regardless of profit or loss, a company tax return must be submitted by corporations, partnerships, and limited liability partnerships (LLP). Even if no operations are carried out, a return must be filed.
  • Businesses, corporations, and LLPs are all subject to a 30% tax rate.

How to file ITR for a small business?

The Government of India has carried out a scheme for small business owners in order to avoid the complex calculations of ITR and simplify their lives. The scheme stipulates that total income is calculated as a defined percentage of the turnover of these businesses. This is referred to as assessing business profits and gains on a ‘Presumptive Basis’ in the context of income tax. For that year, the ‘total income’ is believed to be a percentage of the business’s turnover. 

Presumptive basis of taxation:

Individuals, HUFs, and corporate entities running businesses or offering services can submit their income to tax on a presumptive basis. Presumptive taxes are allowed up to Rs. 2 crores for businesses and Rs. 50 lakhs for professions.

Under the presumptive basis for businesses, a minimum of 8% of the turnover must be supplied as income. Professionals must declare 50% of their professional receipts on their business tax returns.

Did you know that tax audits are required for all types of businesses, regardless of annual turnover, whether they are limited liability companies or sole proprietorships? Entrepreneurs who are just getting started in business may find it difficult to grasp what is ITR Filing? and its process. Don’t worry; connect with the CoffeeMmug platform to meet tax experts who can educate you on the ITR filing process and assist you in filing it. 

ITR for business requires filling out various ITR forms, depending on the situation. The following are the categories for filing an ITR for a business.

  • Firms other than LLPs that have a total income of up to 50 lakhs and that income is computed under Sections 44AD, 44ADA, and 44AE should file ITR-4.
  • LLPs and partnerships that do not file ITR 7 should file ITR-5.
  • Companies that do not claim Section 11 exemption should file Form ITR-6.
  • File ITR-7 exclusively for companies required to file returns under Sections 139(4A), 139(4B), 139(4C), and 139(4D).
  • To file an ITR for a businessperson, utilize ITR-3 or ITR-4, depending on the situation.
  • ITR-3 or ITR-4 is the ITR form for self-employed individuals.

Documents required for filing ITR for business

The documents required for filing ITR for business are:

  • PAN card
  • The financial year’s balance sheet
  •  Auditing records (if applicable)
  • Copy of income tax payment challan (advance tax, self-assessment tax)
  • Other information includes sundry debtors, sundry creditors, stock in trade
  • It’s also crucial to reconcile your 26AS statement to ensure that the TDS deducted in your business name is fully and accurately reported.

How can small businesses file an ITR online?

Steps to fill out the ITR form online by directly entering the values into the portal are:

  1. Go to the income tax e-filing portal, which is the official website for filing ITR-4.
  2. Enter your PAN, password, and C\captcha code to access your account.
  3. Go to ‘e-file’ section and pick ‘Income Tax Return’.
  4. The site will fill in the PAN for you, so all you have to do now is fill in the following information:
  •  Assessment year
  • ITR form number
  • Filing type as ‘Original/Revised Return’
  • Submit mode as ‘Prepare and Submit Online’
  1. Select ‘Continue’ from the drop-down menu.
  2. Read all of the instructions before beginning to fill out the ITR-4 form, using the “Store Draft” button to save the information as a draft.
  3. Once you’ve finished, select the verification option that best suits your needs.
  4. From the drop-down list, pick ‘Preview and Submit’.
  5. Double-check the information you have entered.
  6. File the ITR.

You can access your ITR file through your account once the returns have been confirmed.

IT Filing with expert assistance

If filing taxes appears burdensome, business owners might employ a tax agent to assist them.

  • Clear Tax is one such startup, where you may hire an expert for a reasonable charge to help you with ITRs, GST returns, company registration, trademark registration, and GST registration, among other things.
  • Alternatively, you can use the websites or to file your business taxes.
  • Another platform is TaxMantra, which assists individuals and corporations in filing their tax returns.


The presumptive basis of the taxation scheme is a huge help to small business owners because it frees them up from having to do complicated calculations and reduces their compliance load significantly. Moreover, such business owners are exempt from keeping books of accounts and having them audited by a CA. As a result, the business owner will not be forced to explain to the tax officer all of their deductions and justifications for claims for expenses made in the course of their operation.

Although the government has made submitting tax returns easier by using Saral and Sahaj forms, most people still find it a difficult undertaking. Join CoffeeMug today to find chartered accountants who can assist you in filing your business tax returns.


Q. When must business returns be filed in India?

A. The closing date is Sept 30th if a tax audit is expected; else, the cut-off date is July 31st.

Q. What is advance tax is and when do business owners pay it?

A. The assessment of a year’s income can only be made after the year has passed; advance tax is the payment of your tax liability in the year it is earned before the year has passed. If the assessee’s tax liability exceeds Rs 10,000 in a financial year, advance tax must be paid. The deadlines are:

  • June 15th (15%)
  • September 15th (45%)
  • December 15th (75%)
  • The 15th of March (100%) 

Q. Is it necessary for business owners to preserve a copy of the filed return as proof, and if so, for how long?

A. Yes, under the Income-tax Act, legal proceedings can be undertaken up to 4 to 6 years previous to the current fiscal year (depending on the facts of the case). However, because certain experts can commence procedures even after 6 years, it is recommended to keep the copy of the returns for at least 6 years.

Q. What is the tax rate for LLPs?

A. A Partnership Firm (including LLP) is taxable at 30% for the fiscal year 2022-23.

Q. What exactly is a surcharge?

A. After the initial price has been quoted, a surcharge is a tax, fee, or charge that is appended to the price of a product or service. 

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