What businessmen or self-employed need to know while filing income tax returns

For the people who run a business or are self-employed, income tax returns have to be filed on the total income for the financial year after a tax audit. This is an audit by a qualified chartered accountant, who inspects the books and determines the expenses that may be allowed against the income to certify that the assessee has kept the books of accounts as required. The taxes, as applicable under the Income Tax Act, can be paid only after such an audit.

Conditions If, in a given financial year, the income from business is more than Rs 1 crore or if the receipts from profession are higher than Rs 25 lakh, the assessee will have to get a tax audit done.

Taxable income A qualified chartered accountant looks at the cash, bank book and invoices for income and expenses.This is to determine the expenses incurred by the business or profession that can be allowed as deduction under the provisions of the law. The objective of the audit is to determine the taxable income.

Return The tax audit process should be completed, and the balance sheet as well as the profit and loss account should be drawn up for the assessee. The return has to be filed before 30 September of the assessment year.

Advance tax The assessee who is subject to tax audit has to pay the advance tax in September, December and March of a financial year. He should have paid all the dues by 15 March and any excess payment of tax after the audit can be claimed as a refund.

Points to note > The business enterprises that are subject to regulatory audits need not carry out a separate tax audit if it is for the same financial year.

> It is mandatory for all businesses and professions that are subject to a tax audit to e-file the audit reports along with the income tax returns.

The content is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.