If you own a business, you must be diligent about filing your income tax returns (ITR) and paying your corporation tax (online, if needed) to stay tax compliant. In the ITR form, you must furnish information regarding the income earned during the previous year. It includes the tax calculated upon that income for the income tax department to review.

Owners of small businesses also need to file for income tax return under ITR 4, i.e. individuals with presumptive income from a business or a profession. The Presumptive Taxation Scheme, as per Section 44AD, Section 44 DA and Section 44AE of the Income Tax Act, is a program which has been designed to reduce accounting requirements of some individuals and small business owners. Under the scheme, small business owners can simply apply a certain percentage to their revenue which becomes their taxable business income.

Additional Read – What Are Tax Benefits Available For Small Business in India?

How to file Income Tax Return

You can fill the ITR form for your company either online or offline, depending on which mode you are eligible for.

Offline eligibility criteria –

  1. The individual is 80 years of age or above
  2. The income of the individual is not more than Rs. 5 lakhs
  3. Individuals who do not have to claim a refund in the ITR

You can either submit a physical paper form or you can furnish a bar-coded return if you want to declare income from business ITR form offline.

To file your ITR online, you can either,

a) Furnish the return electronically under digital signature, or

b) Transmit the data electronically and then submit the verification of the return.

In case you opt for the first method, an acknowledgement will be sent to your registered email ID. You can also download it manually from the IT Department’s website. Following that, you should sign it and send it to the tax department’s CPC office within 120 days of filing.

More about Presumptive Taxation Scheme

The main purpose of this scheme is to give small businesses in India a provision for their income to be assumed based on gross receipts. As a small business owner, you may not have enough resources to maintain proper accounting information and could face difficulty in calculating your profit or loss. In that situation, it can become difficult to keep track of your income and filing for a business ITR becomes challenging.

Additional Read – Tax Saving Tips for Small Businesses

In this scheme, tax is paid on an estimated basis that is, your net income is estimated to be 8% of the gross receipts of your business. Under this scheme, you do not have to maintain books of accounts, nor do you have to pay your taxes in quarterly instalments. However, you are not allowed to deduct your business expenses from this income.

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