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E-filing Income Tax Returns for Companies: Procedures and Guidelines

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The benefits of electronic filing over manual filing have increased its popularity in recent years. By being informed of the qualifying requirements and advantages of e-filing, businesses can decide the best way to submit their tax returns and take advantage of the numerous perks.

Importance of e-filing income tax returns for companies

The following are some of the key justifications for filing taxes electronically:

  • Convenience: One of its most significant benefits is the simplicity of computerized income tax return filing. Taxpayers can submit their tax returns anytime, from anywhere, without going to a tax office or using paper forms. Even those with busy schedules or mobility issues can submit taxes because it takes less time and effort.
  • Accuracy: By filing your income tax forms electronically, you can minimize errors and omissions. E-filing service providers usually include prompts and reminders to ensure all required fields are filled out. Electronic forms are designed to simplify taxpayers’ entry of proper tax information. Errors that ultimately lead to an audit or other issues are less likely to occur if this is done.
  • Faster processing: Your tax returns may be processed more quickly if you file them electronically. Online returns can be processed by the government’s tax office more quickly and efficiently than paper ones. For taxpayers, this leads to quicker refund processing or earlier tax payments to avoid penalties and interest.
  • Lower costs: Potentially less expensive than filing a paper tax return is filing an income tax return electronically. Mailing a paper tax return can help taxpayers save on postage, printing, and other costs. Many e-filing service providers also have lower prices than traditional tax preparation services, or they are even free.
  • Security: One secure method is to file tax returns electronically. Private taxpayer information is protected by encryption and other security measures on electronic forms. This might give taxpayers peace of mind if they are concerned about their financial and personal information security.

Procedures for e-filing income tax returns for companies

The registration process for electronically filing income tax returns is detailed in the following chart:

e-filing income tax returns for companies

Filing the income tax return

The steps for filing business income taxes electronically, from signing up to submitting tax returns, are listed here.

  • Obtain relevant data: Before starting the e-filing process, businesses must gather the relevant information, such as their tax ID number, income statements, and deductions.
  • Pick a trustworthy e-filing provider: The e-filing service businesses use to file their income tax returns should be reliable. Before selecting one of the many online e-filing service providers, businesses should examine the features, prices, and reviews of each.
  • Register with the e-filing service: A business must register with the company it has chosen as its e-filing service provider to create an account.
  • Information to be entered into the e-filing program: Businesses must enter their tax information into the e-filing program after registering. The program will walk users through the process and prompt them to enter the pertinent data accurately.
  • Review and check for errors: To ensure accuracy, businesses should thoroughly double-check all the information before completing the return. Tools for error-checking to find typos or omissions may also be included in the e-filing software.
  • Submit the return: Once confirmed that the return is accurate and complete, it can be filed electronically. The software will provide a tracking reference number and confirm the submission.
  • Pay any taxes due: Companies can utilize the e-filing program to pay any taxes they owe using a credit card, debit card, or electronic money transfer.
  • Obtain confirmation and updates on the status: The e-filing service provider will provide businesses with a confirmation of receipt when the return has been submitted. They can also track the status of their income tax return online to learn whether it has been approved or denied and whether any issues need to be fixed.

Guidelines for e-filing income tax returns for companies

Eligibility for e-filing income tax returns

  • Taxpayers of all types, including individuals, businesses, and nonprofits, can electronically file their tax returns.
  • To file income tax returns electronically, taxpayers must have a valid permanent account number (PAN) the government provides.

Types of companies that can e-file income tax returns

Every year, income tax returns on Form ITR-6 and MCA annual returns must be filed by all varieties of firms with Indian registrations.

Consequences of non-compliance with guidelines

Every Indian taxpayer has a significant obligation to file an ITR. It is a prerequisite for acquiring loans, visas, and other financial services and a legal requirement. ITR failure can have serious repercussions, including financial and legal penalties. Now, we’ll discuss the penalties for not filing an ITR, including interest fees on the existing tax balance as well as penalties for filing an ITR late and penalties for not filing an ITR at all.

  1. Penalty for delay in filing an ITR: Every Indian taxpayer must file an ITR. It is a prerequisite for acquiring loans, visas, and other financial services and a legal requirement. ITR failure can have serious repercussions, including financial and legal penalties. 
  2. Penalty for non-filing ITR: A taxpayer faces a fine of up to Rs. 10,000 if they fail to submit an ITR. The tax obligation is in addition to this penalty. The entire penalty amount will be Rs. 30,000 (Rs. 20,000 tax liability + Rs. 10,000 penalties), for example, if the taxpayer’s total income is Rs. 5 lakh and the tax liability is Rs. 20,000.
  3. Interest charges on outstanding tax amounts: If taxpayers don’t pay their tax obligation, they will be required to pay interest at 1% per month on the unpaid tax balance. This interest is calculated from the ITR filing deadline to the actual payment date. The interest charge may rise if the taxpayer does not pay the tax debt or penalty for not filing an ITR for a lengthy period.

What happens if you fail to file ITR?

Let’s examine the effects of failing to file your income tax returns.

Penalty

There is a three-tiered fine structure in effect for those who fail to submit their income tax returns by the deadline. Individuals must pay a 5,000 rupee fee in addition to their tax debt if they file their income tax returns after the deadline but before December 31. In other situations, such as when the income tax return is filed on or after January 1st, the fine is 10,000.

 Revised income tax return

When completing your income tax return, you can file a revised return to correct mistakes. Before, taxpayers had two years from when the error was made to file an amended tax return. However, the government has shortened that window to just a single year. As a result, you have extra time to file your income tax returns early and avoid penalties for not doing so.

Levy of interest

If you don’t submit your ITR by the deadline, you will be subject to a penalty from the government in the form of 1% per month in interest. Such interest liabilities are payable after withholding tax at source, tax collected at source, advance tax, and other possible tax credits under the Income Tax Act.

Bar on the carry forward of losses

If you don’t file your ITR, go to https://incometaxindia.gov.in/Pages/tax-services/file-income-tax-return.aspx. Unless you pay your debts on time, you cannot carry any losses—including “profits and gains of business or profession” or “capital gains”—forward. Individuals may, however, deduct unused depreciation under the heading “income from house property.”

Conclusion

In India, businesses must now report income taxes electronically to comply with the law. While e-filing is mandated for some businesses, it is recommended that all businesses take advantage of its benefits, such as accuracy, simplicity, and cost savings. By simply following the simple instructions to e-file their income tax returns, businesses may ensure timely compliance with tax regulations and benefit from the numerous advantages of e-filing. As e-filing technology advances over the next few years, more businesses will likely use it to submit their tax returns.

Another option is to use Chennai-based Kanakkupillai.com to file an IT return on behalf of their company electronically. Thanks to its knowledgeable team and state-of-the-art technology, Kanakkupillai can help businesses compile the necessary tax-related documentation, prevent common mistakes, and accurately and swiftly file their tax returns. Kanakkupillai also offers supplementary services, such as tax preparation, accounting, and bookkeeping, to help businesses manage their finances.

FAQs

1. Is e-filing of income tax returns mandatory for companies?

A company must submit income tax returns digitally, with or without a digital signature. A partnership firm can also file income tax returns using an EVC.

2. What are the documents required for e-filing income tax returns?

PAN (permanent account number), Aadhar number, Form 26AS, Bank account details, Challan of any advance tax or self-assessment tax (if paid during the year), and Details of the original return (if filing a revised return)

3. Can a company e-file its income tax return without a digital signature certificate?

Some services/user categories, such as E-verification of returns filed by businesses and political parties, as well as other people whose accounts must be audited under Section 44AB of the Income Tax Act, require DSC as a requirement. It is optional in other situations.

4. Is filing an income tax return for every financial year necessary?

A person or corporation that receives any income during a financial year must file a return each year. The revenue may come from wages, business profits, rental income from real estate, dividends, capital gains, interest payments, or other sources.

5. Can a company revise its e-filed income tax return?

Yes, before the end of the assessment of the return or three months after the completion of the assessment year, whichever is earlier, any taxpayer may file a revised income tax return.

Kanakkupillai

Kanakkupillai is your reliable partner for every step of your business journey in India. We offer reasonable and expert assistance to ensure legal compliance, covering business registration, tax compliance, accounting and bookkeeping, and intellectual property protection. Let us help you navigate the complex legal and regulatory requirements so you can focus on growing your business. Contact us today to learn more.