Income Tax Compliances for Businesses in India

Income Tax Compliances for Businesses in India

The deadline to file income tax returns (ITR) for the assessment year 2021-22 is 31 December. Though the income tax (I-T) department has introduced an automated filing system, annual information statement (AIS), and other initiatives to ease the filing process, filing tax returns can be cumbersome.

Filing Income Tax Returns (ITR) may be cumbersome, but its benefits far outweigh the momentary inconvenience. According to the income tax laws, filing ITR is mandatory for some and voluntary for others. However, filing it is essential regardless of the category one falls under.

ITR is a tax return form used by taxpayers to report their income and assets to the Indian Income Tax Department (Indian Revenue Authorities). It has details related to the taxpayers’ personal and financial data. ITR is essentially a type of self-declaration by the taxpayer of their income, assets and applicable taxes paid. While it is mostly filed in the electronic mode, there is an option for senior citizens to file it manually as well.

Every person real or artificial, incorporated or otherwise subject to certain exemption limits is liable to file ITR. As per the law, a taxpayer may be a person, artificial judicial person, the body of individuals (BOI), Hindu undivided family (HUFs), the association of persons (AOP), firm, trust, company, or a society.

Since ITR forms are attachment-less forms, taxpayers are not required to attach any documents such as proof of investments, tax deducted at source (TDS) certificates, etc., along with the return of income filed electronically or manually. However, it is advisable to maintain these documents and furnish them before the tax authorities when required, especially in situations like assessment, inquiry, etc.

The process is completed when the ITR filed by the taxpayer is e-verified through OTP generated using the Aadhaar registered mobile number or using internet banking.

Who is Required to File ITR?

The income tax law mandates taxpayers of specific categories to file ITR within the due dates. Below is the ITR filing criteria for taxpayers in India:

1) Individuals with gross annual income above exemption limits as mentioned below:



For individuals below 60 years

INR 2.5 lakh

For individuals above 60 years but below 80 years

INR 3 lakh

For individuals above 80 years

INR 5 lakh

 Every company and firm (irrespective of their profit or loss)

3) An individual, being a resident and ordinary resident in India, if they:

  1. holds, as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India, or
  1. has signing authority in any account located outside India, or
  1. is a beneficiary of any asset (including any financial interest in any entity) located outside India.

4) A person who has deposited an aggregate amount of more than INR 1 crore in one or more current bank accounts.

5) A person who has incurred an aggregate expenditure of more than INR 2 lakh on foreign travel for self or any other person.

6) A person who has incurred an expenditure aggregate of more than INR 1 lakh towards electricity consumption.

As per the data released by the government, for the tax year 2018-19, around seven crores [1] ITRs were filed by taxpayers in India.

Created & Posted by Pooja

Income Tax Expert at TAXAJ


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