All businesses are required to file an annual income tax return with the government on or before the due date of filing.
However, a proprietor is not requried to file income tax return if his or her income for the financial year does not exceed the basic exemption limit. The basic exemption limit fixed for the financial year 2022-23 and 2023-24 is 2,50,000 rupees.
Which income tax return form to be uesed for filing
The income tax form you use depends on how your business is organized.
Many small business owners operate as sole proprietorships, allowing them to report all of their business income and expenses using a ITR-3 or ITR-4. In the case of sole proprietors, business income is reported along with their personal tax returns. In other cases, business return is reported separately in different forms as specified by the tax department.
If you operate as a partnership firm, the tax department has specified ITR-5.
In the case of a private limited, OPC, public limited company, form ITR-6 is to be filed.
Payment of tax and refund
As per our tax laws, if your tax liability is 10,000 rupees or more, you must estimate the amount of tax you might owe during the financial year and pay that amount during the year in installements.
The due dates for quarterly tax payments are usually June 15, September 15, December 15 and march 15. However it is to be noted that the 10,000 rupees or more limit is arrived after the deduction of all the tax credits of TDS / TCS / foreign tax credit / Section 89 relief etc. from the original estimated tax liability.
If you fails to pay income tax prior to the above mentioned due dates, you would be liable to pay interest on the unpaid tax under sections 234B and 243C.
As per sections 234B and 234C, a penalty interest of 1% per month or part thereof is applied for default in payment of advance tax.
You will get a tax refund if you paid more taxes than you owed during the financial year.
In case of sole propritorship business, taxes are included in their total income to determine whether they can get a tax refund.