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Which ITR should a company file?

In India, it is a legal requirement for all companies, regardless of their financial standing, to file Income Tax Returns (ITRs). This obligation extends to dormant companies that have not engaged in any business activities during the fiscal year. The determination of the appropriate ITR form to file depends on several factors, including the sources of the taxpayer's income, the total income earned, and the category of the taxpayer, such as individuals, Hindu Undivided Families (HUFs), companies, and so on. In this article, our focus will be on identifying the appropriate ITR form for companies to file.

Understanding the ITR-6 Form 

The ITR-6 form is a specific document utilized for the submission of income tax returns by certain companies. This excludes those companies that are applying for exemption under section 11 of the Income Tax Act, 1961. 

Entities that ITR-6 is Applicable To 

  • Companies: This includes One Person Companies (OPCs).
  • Limited Liability Partnerships (LLPs): These are business entities that incorporate elements of both partnerships and corporations.

Income Tax Returns for Companies: Understanding ITR-6 

ITR -6 is the designated form utilized by certain companies for

Contact The Tax Heaven for your Company tax return filing.

Income Tax Return (ITR)

An Income Tax Return (ITR) represents a crucial document whereby taxpayers provide details about their earned income and the corresponding tax to the income tax department. As it stands, the department has issued seven distinct forms, namely, ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7. It is incumbent on each taxpayer to ensure the timely filing of their ITR, adhering strictly to the stipulated deadline.

Identifying the Appropriate ITR for Your Company

The specific Income Tax Return (ITR) form that a company should utilize depends on its particular business structure and the income it generates. 

  • Form ITR-4: This form is suitable for firms, excluding LLPs, which generate a total income of up to ₹50 lakhs. The income should be calculated under Sections 44AD, 44ADA, and 44AE of the Income Tax Act.
  • Form ITR-5: This form is applicable for filing ITR for Limited Liability Partnerships (LLPs) and partnerships. Please note, ITR-5 should not be confused with ITR-7, which serves a different purpose.
  • Form ITR-6: Companies that are not claiming tax exemptions under Section 11 should utilize the ITR-6 form for filing their income tax returns.
  • Form ITR-7: This form is designed specifically for companies that are required to file returns under Sections 139(4A), 139(4B), 139(4C), and 139(4D) of the Income Tax Act.

Form ITR 4 (Sugam) - Suitable for Non-LLP Firms

The Form ITR-4 is an income tax return form designed specifically for taxpayers with business income. This form is exclusively for those who have chosen the presumptive taxation scheme.

Applicability

For a company to determine the appropriate Income Tax Return (ITR) form, specific conditions must be met. In the case of Form ITR 4 (Sugam), these conditions include: 

  • The assessee, or the entity paying taxes, falls into one of the following categories:
    • An individual taxpayer,
    • A Hindu Undivided Family (HUF), or
    • A partnership firm that is not classified as a Limited Liability Partnership (LLP).
  • Under Section 6(6) of the Income Tax Act, the assessee is classified as an ordinary resident.
  • The assessee earns income from Profits and Gains of Business or Profession as per Section 28 of the Income Tax Act.
  • The assessee has chosen to follow the presumptive taxation scheme as outlined in Sections 44AD, 44ADA, or 44AE.
  • Assessee's taxable income is determined according to Sections 44AD, 44ADA, or 44AE.
  • Assessee needs to file Form 3CA/3CB and Form 3CD according to Rule 6G.

Refer to the attached ITR Form 4 here:

The ITR-5 tax return form is for firms, LLPs, Associations of Persons, Bodies of Individuals, Artificial Juridical Persons, deceased and insolvent estates, business trusts, and investment funds.

ITR-6: Applicable for Companies not Availing Exemption under Section 11

ITR -6 is a tax form used by companies not claiming exemption under section 11 of the Income Tax Act, 1961.It is applicable to: 

  • Companies, including One Person Companies (OPCs)
  • Limited Liability Partnerships (LLPs)

ITR-7 – For Companies

ITR-7 is a tax form for entities obligated to file returns under different sections of the Income Tax Act, 1961. 

Entities that use ITR-7 include: 

  • Companies not covered by other ITR forms
  • Firms
  • Trusts

Information Necessary for an ITR Form 

The specific information required in an ITR form can differ depending on the particular ITR form. Nonetheless, the following information is generally necessary:

  • Personal details: Includes name, PAN, address, birth date, etc.
  • Income details: Covers income from salary, business, capital gains, etc.
  • Deductions and exemptions details: Covers claimed deductions and exemptions under Income Tax Act, 1961.
  • Tax payment details: Covers taxes paid, advance tax, self-assessment tax, TDS.
  • Foreign assets and income details: If applicable.
  • Signature and verification: The form must be signed and verified.

It's important to provide correct information in the ITR form to avoid penalties and legal issues from incorrect tax returns.

 

author

The Tax Heaven

Mr.Vishwas Agarwal✍📊, a seasoned Chartered Accountant 📈💼 and the co-founder & CEO of THE TAX HEAVEN, brings 10 years of expertise in financial management and taxation. Specializing in ITR filing 📑🗃, GST returns 📈💼, and income tax advisory. He offers astute financial guidance and compliance solutions to individuals and businesses alike. Their passion for simplifying complex financial concepts into actionable insights empowers readers with valuable knowledge for informed decision-making. Through insightful blog content, he aims to demystify financial complexities, offering practical advice and tips to navigate the intricate world of finance and taxation.

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