Company tax return for startups availing tax incentives in India
Company tax return for startups availing tax incentives in India
Company tax return for startups availing tax incentives in India
Filing a company tax return for startups availing tax incentives in India involves specific steps and considerations, as these startups may be eligible for various tax benefits and incentives provided by the Indian government to promote entrepreneurship and innovation. As of my last update in September 2021, here's a general overview of the process for filing a company tax return for startups availing tax incentives in India. However, please keep in mind that tax laws and regulations may change over time, so it's essential to consult with a qualified tax professional or refer to the latest information from the Indian tax authorities for the most up-to-date guidance.
1. Recognized Startup:
To avail of tax incentives, the startup must be recognized as a "Startup" by the Department for Promotion of Industry and Internal Trade (DPIIT), Government of India. Startups fulfilling the specified criteria related to age, turnover, and innovation are eligible for recognition.
2. Income Tax Exemption under Section 80-IAC:
Startups that are eligible for recognition can avail of a tax holiday for three consecutive years out of their first ten years of operation. This exemption is provided under Section 80-IAC of the Income Tax Act.
3. Calculate Taxable Income:
Calculate the startup's taxable income by deducting eligible expenses, allowances, and exemptions from the gross income. Consider the tax incentives provided under Section 80-IAC while computing the tax liability.
4. Choose the Correct Tax Form:
Startups must choose the appropriate Income Tax Return (ITR) form based on their legal structure and income. For example, companies with turnover up to Rs 50 crore can file Form ITR-6 for the Assessment Year 2022-23.
5. File the Tax Return:
Prepare and file the startup's tax return using the chosen ITR form. The tax return filing due date varies each year and depends on the type of entity and its turnover.
6. Tax Audit (if applicable):
Startups that cross a certain turnover threshold may be required to get their accounts audited by a chartered accountant. For the Financial Year 2021-22 (Assessment Year 2022-23), the tax audit threshold was set at Rs 10 crore for businesses that receive digital payments and Rs 1 crore for businesses that do not receive digital payments.
7. Pay any Tax Due (if applicable):
After filing the tax return, if the startup has a tax liability after considering the exemptions, ensure timely payment of the tax amount.
8. Maintain Compliance Records:
Keep copies of all filed tax returns, financial statements, and relevant documents for future reference and in case of any tax audits or inquiries.
Startups in India can benefit from various tax incentives to support their growth and innovation. To ensure accurate and compliant tax filing while availing tax incentives, it is advisable for startups to seek advice from tax professionals with expertise in dealing with tax matters specific to startups. This will help ensure accurate and timely filing of the company's tax return and adherence to applicable tax laws and regulations related to tax incentives for startups.
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