What is the reason for filing a tax return?

The central government levies and collects income tax on earnings. The tax on earned income is due in the same fiscal year in which it was accrued in the form of advance tax. However, the Assessment Year provides notification and calculation of income and tax liability. Every company is compulsory to file ITR every year. Depending on the requirements, taxpayers have different forms and time limits for filing ITRs.

The Advantages of Filing a Tax Return

Allows losses to be carried forward

The majority of businesses lose money in their first few years. If an ITR is submitted, a company loss can be carried forward for eight years. This loss can also be offset against future earnings, lowering future taxable income. The taxpayer loses this benefit if an ITR is not filed.

Determine your financial worth

The taxpayer's financial worth is determined by the ITR filed with the government. The ITR track demonstrates financial capability while also increasing a company's capital base. As a result, the previously filed ITR determines the track of revenue and financial worth. Investors and institutions await the filing of returns to determine the business's capacity.

Processing of loans and high-risk insurance

For loan processing, the income tax return is beneficial. The higher the financial value, the easier it is to get a loan. The same is true for high-risk insurance. In this context, the ITR is an essential document for making judgments.

Claim refund of TDS

Income on which TDS has been deducted. The tax liability after allowed deductions may be less than the amount of TDS deducted. In such circumstances, the extra payment can only be claimed as a refund if the company files an ITR.

Documents needed to file an ITR

  • PAN Card of company.
  • PAN and Aadhar of Director of company.
  • Any one of the company's directors' DSC.
  • Cancelled Cheque for bank details.
  • Statement of Bank Account for the relevant financial year.
  • Loans and Investment details.

Applicable ITR forms

ITR – 6

This form is used by All companies, except those that claim a tax exemption under Section 11

ITR – 7

This form is used by Firms, Companies, Local authorities, AOP, and Artificial Judicial person if they claim exemption as income earned from charitable /religious trust, political party, scientific research institutions, universities or colleges, or institutions.

Common Errors When Filing ITRs

Here are some of the most typical tax-filing errors to avoid.

Choosing the Wrong Form
  • To file returns, the appropriate ITR form must be selected.
  • The income sources received during the financial year define the form used.
Failure to disclose all sources of income
  • Failure to disclose all sources of income is a common mistake made by taxpayers. Whether the income is taxable or not, it must be stated.
  • All earnings, not only the primary ones from work, profession, or business, must be declared. Whether it's interest from a savings account, a fixed deposit, rental income from home, income from short-term capital gains, or any other source.
  • If such earnings are not recorded, the income tax authorities may issue notice.
Giving inaccurate company information

Because all personal information will be kept in the Department's databank and may be validated, entering your data correctly before filing your taxes is critical. PAN, name, address, e-mail address, phone number, date of incorporation, bank account number, IFSC Code, and other information must be entered correctly. You may miss your refund claim or other critical alerts if you make any error in these details.

TDS is not reconciled with Form 26AS

Before filing, make sure you compare your ITR with Form 26AS. Form 26AS contains all of your income information, as well as tax Deducted at Source (TDS), advance tax paid by you, and self-assessment tax. It's possible that TDS was deducted from your pay. You must cross-check Form 16 with the information on Form 26AS.

Excludes tax-free earnings

All income, whether exempt or not, is required to be recorded under tax laws. Many earnings are tax-free, for instance, long-term gains, dividends, etc. You must declare them even if you do not have to pay any taxes on them.

Tax Rates for Companies
Category Tax Rate
Foreign companies 40%
Indian Companies:
  • Normally
  • Turnover <= Rs.400 Corers in FY 2019-20
  • Subject to115BAA
  • Subject to115BAB
  • 30%
  • 25%
  • 22%
  • 15%
Indian company can opt section 115BAA or 115BAB, after fulfillment of certain conditions.
Surcharge applicable to Companies
Companies (Total Income) Surcharge

General (other than Domestic company opting for Section

  • 115BAA or 115BAB)
  • More than 1Crore
  • More than10Crore
  • 12%
  • 7%
Domestic company opting 115BAA and 115BAB 10%
  • Foreign Company
  • More than 1Crore
  • More than 10Crore
  • 2%
  • 5%
  • Marginal relief is available if the tax payable, including the surcharge, is more than the excess income over the limit.
Penalty for late return filing

Return file after 31.12.2021

  • Up to 5 lakh income- Rs.1000.
  • Income more than 5 lakh- Rs. 5000

Plans

Rs. 4999 All inclusive price

Starter

  • Income From Business (Turnover Up to  2Cr.)
  • ITR Acknowledgement
  • Computation Of Total Income
  • Profit & Loss Account And Balance Sheet
  • Expert Support
Rs. 15999 All inclusive price

Plus

  • Income From Business (Turnover Up to 2Cr.)
  • ITR Acknowledgement
  • Computation Of Total Income
  • Profit & Loss Account And Balance Sheet
  • Expert Support
  • Business Accounting For One Year
Rs. 19999 All inclusive price

Pro

  • Income From Business (Turnover Up to 2Cr.)
  • ITR Acknowledgement
  • Computation Of Total Income
  • Profit & Loss Account And Balance Sheet
  • Expert Support
  • Business Accounting For One Year
  • Company Annual Compliance
Rs. 6999 All inclusive price

Professional

  • Income From Business (Turnover More than 2Cr.)
  • ITR Acknowledgement
  • Computation Of Total Income
  • Profit & Loss Account And Balance Sheet
  • Expert Support
Rs. 19999 All inclusive price

Advanced

  • Income From Business (Turnover More than 2Cr.)
  • ITR Acknowledgement
  • Computation Of Total Income
  • Profit & Loss Account And Balance Sheet
  • Expert Support
  • Business Accounting For One Year
Rs. 24999 All inclusive price

Basic

  • Income From Business (Turnover More than 2Cr.)
  • ITR Acknowledgement
  • Computation Of Total Income
  • Profit & Loss Account And Balance Sheet
  • Expert Support
  • Business Accounting For One Year
  • Company Annual Compliance