Income Tax Return for Business

A business income tax return is a fundamentally different exercise from a salaried return. By the time books are closed for FY 2025-26, a proprietorship, partnership, LLP, company or trust has already made dozens of decisions that shape its tax position — choice of presumptive vs regular taxation, applicability of tax audit under Section 44AB, depreciation method under Section 32, MAT / AMT computation, advance-tax instalments paid against estimated income, capital gains realisations, related-party transactions, and the new vs old tax regime election that is now binding for the year. The ITR is where these decisions are tested against the income-tax portal's pre-populated data, the AIS / TIS, the tax-audit report, the GST returns, and any TDS / TCS movements.

For AY 2026-27 the architecture is settled but unforgiving. The new regime under Section 115BAC is the default; companies on Section 115BAA (22%) or Section 115BAB (15% for new manufacturing) cannot revisit the election; LLPs and firms continue at 30% with the AMT overlay under Section 115JC. The presumptive thresholds have been liberalised — Section 44AD up to ₹3 crore (where 95% of receipts are non-cash) and Section 44ADA up to ₹75 lakh for professionals (under the same cash-receipts test). Tax audit under Section 44AB applies above ₹1 crore turnover (₹10 crore where 95% non-cash), or above ₹50 lakh gross receipts for professionals, or where presumptive income is declared below the deemed rate. Advance-tax instalments have hardened — Section 234B and 234C interest is now systematic, not sporadic.

We file business ITRs end-to-end — books closure, tax audit (where applicable), regime selection, presumptive vs regular working, depreciation, MAT / AMT, advance-tax reconciliation, capital gains, and Schedule-wise disclosure — and defend them through any subsequent 143(1) or 143(2) scrutiny.

Choosing the Right Form

• ITR-3 — Proprietorship and Partner Income:: Income from business or profession with full books of accounts; partners receiving share / interest / remuneration from a firm or LLP; capital gains and other heads.

• ITR-4 (Sugam) — Presumptive Taxation:: Section 44AD (eligible business; 8% / 6% deemed profit), Section 44ADA (specified profession; 50% deemed profit), Section 44AE (goods carriages; per-vehicle slabs); turnover within prescribed limits; not for partnerships / LLPs.

• ITR-5 — Firms, LLPs, AOPs, BOIs:: Partnership firms and LLPs with full Schedule disclosures; AOPs / BOIs and certain other entities.

• ITR-6 — Companies (Other Than Section 11 Trusts):: All companies, including OPC and Section 8 companies (where Section 11 exemption not claimed); MAT under Section 115JB; Section 115BAA / 115BAB elections.

• ITR-7 — Trusts and Specified Entities:: Charitable trusts under Section 11 / 12; political parties under Section 13A; research institutions and similar bodies.

The Decisions Embedded In Every Business Return

Regime Selection: New regime (115BAC for individuals / HUFs running business; 115BAA / 115BAB for companies) vs old regime — once exercised by a business assessee, opt-out is restricted (Section 115BAC(6) for individuals with business income; irrevocable for companies under 115BAA / 115BAB).

Presumptive vs Regular: Presumptive saves audit cost and complexity but locks in a deemed margin; regular allows actual loss / lower-margin years but requires tax audit above the threshold and Section 44AA books.

Depreciation under Section 32: Block-of-assets approach, additional depreciation under Section 32(1)(iia) for new plant in manufacturing, half-rate for assets used under 180 days.

MAT / AMT: MAT at 15% of book profits under Section 115JB for companies (MAT credit carry-forward 15 years); AMT at 18.5% for non-corporate assessees claiming specified deductions / Section 35AD.

Advance Tax & Sections 234A / B / C: 15% by 15 June, 45% by 15 September, 75% by 15 December, 100% by 15 March; presumptive taxpayers under 44AD / 44ADA pay 100% by 15 March.

Where Business Returns Get Caught

AIS / TIS / 26AS mismatch — TDS, GST turnover, high-value transactions all flow into the portal and any divergence from the ITR generates a 143(1) intimation. Cash transactions above prescribed limits triggering Section 269ST / 269SS / 269T disallowance. Related-party transactions without Section 92BA documentation. Section 40A(3) cash-payment disallowance. Section 14A read with Rule 8D disallowance for exempt-income earners. Bogus loss / sham transaction adjustments under Sections 68 / 69. We pre-empt these by reconciling all portal data to books before the return is filed.