Setting up a business in Bangalore comes with the responsibility of navigating the complexities involved in filing income tax returns. One crucial aspect is the business tax return, which essentially serves as a comprehensive statement of a business's income, expenditure, and tax obligations.
What is a Business Tax Return?
A business tax return mirrors an income tax return and comprises a detailed account of a business's financial transactions. This includes the declaration of profits, assets, liabilities, and various financial elements such as fixed assets, debtors, and creditors.
Who Must File a Business Tax Return in Bangalore?
Filing requirements depend on the business structure:
1. **Sole Proprietors:** Individuals operating as sole proprietors need to declare both business income and personal income (e.g., salary, house property income, interest income) in the same return.
2. **Basic Taxable Limit:** If the total income before deductions exceeds the basic taxable limit of Rs. 2.5 lakh, filing a business tax return is mandatory, regardless of the business's profit or loss.
3. **Companies, Firms, and LLPs:** Regardless of profit or loss, these entities are obligated to file a business tax return. The applicable tax rate for companies, firms, and LLPs is 30%.
Income Tax Audit in Bangalore
1. **Turnover Threshold:** Businesses with a turnover exceeding Rs. 1 Crore (for businesses) or Rs. 50 Lakh (for professionals) must undergo a tax audit.
2. **Loss Carry-forward:** A tax audit is required when a business incurs a loss and seeks to carry it forward for future offsetting.
3. **Profits Below 8% (6% for Digital Transactions):** A tax audit is necessary if profits declared by the business are less than 8% (6% for digital transactions) of the turnover.
Presumptive Taxation in Bangalore
1. **Eligibility:** Individuals, HUFs, and firms can opt for presumptive taxation with turnover limits of Rs. 2 Crore for businesses and Rs. 50 Lakh for professionals.
2. **Presumptive Income:** Businesses must declare a minimum of 8% of turnover as income, while professionals declare 50% of their receipts.
Due Dates for Filing Returns in Bangalore
1. **Non-Tax Audit Individuals:** The filing deadline is 31st August after the financial year (with a provision for belated filing until 31st March with penalties).
2. **Tax Audit Entities:** For entities like companies, LLPs, or partnership firms, the due date is 30th September after the financial year (extended to 31st October for FY 2017-18).
Penalties for Non-Filing in Bangalore
1. **Loss Carry-forward:** Filing after the due date prevents the carry-forward of business losses.
2. **Section 271F Penalty:** A fine of Rs. 5000 can be imposed under Section 271F for non-filing.
Understanding these aspects is crucial for businesses in Bangalore to ensure compliance with income tax regulations and avoid penalties. Seeking professional assistance, such as from a Chartered Accountant, can help streamline the filing process and ensure accurate submissions.
Created & Posted by (Aashu)
Article at TAXAJ
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