What are the compliance requirements for a company’s income tax return?

For business owners in India, tax season can feel like navigating a complex labyrinth. Among the many responsibilities, filing an income tax return for your company stands out as more than just a financial task—it’s a critical legal obligation. Understanding the intricate income tax return compliance requirements is absolutely essential for every company registered in India, regardless of its size, revenue, or profitability. Non-compliance can lead to hefty penalties and legal troubles, while adhering to the regulations enhances your company’s financial credibility and ensures seamless operations. It is crucial to be well-versed with the income tax compliance policies for companies in India to avoid any pitfalls. This comprehensive guide will break down everything you need to know, from essential documents and mandatory audits to filing procedures and post-filing responsibilities, ensuring you meet all requirements for company tax returns in India.

Understanding Your Company’s Filing Obligations

Before diving into the procedural details, it’s vital to establish the foundational rules of corporate tax filing. The law is unequivocal about which entities must file and why it is a non-negotiable annual duty. Many business owners, especially those with new or non-operational companies, often have questions about their specific obligations. Clarifying these basics is the first step toward perfect compliance.

Who Needs to File a Company ITR?

The Income Tax Act, 1961, mandates that every company registered in India must file an Income Tax Return (ITR) annually. This rule applies universally, with no exceptions based on income level or business activity. The requirement covers all types of companies incorporated under the Companies Act, 2013, or its predecessor, the Companies Act, 1956.

The primary categories include:

Private Limited Company: The most common corporate structure for startups and SMEs.
Public Limited Company: Companies that can offer their shares to the general public.
One Person Company (OPC): A modern corporate structure that allows a single individual to form a company.

It’s also worth noting that while Limited Liability Partnerships (LLPs) have their own set of compliance requirements and file a different form (ITR-5), they too are subject to mandatory annual income tax filing.

The “Nil” Return: Filing is Mandatory Even with No Income

One of the most common misconceptions among new entrepreneurs is that an ITR is not required if the company has not generated any revenue or has incurred a loss. This is incorrect. The law requires every registered company to file an ITR for each financial year from the date of its incorporation until the date of its official closure or winding up.

Filing a “Nil” or “Loss” return is compulsory even if:

The company had zero business activity during the financial year.
The company is dormant.
The company incurred a net loss.

Filing a loss return is not just a statutory obligation; it’s also strategically beneficial. It is the only way to carry forward business losses (except for depreciation loss) to subsequent years. These carried-forward losses can then be set off against future profits, significantly reducing the company’s tax liability in profitable years.

The Ultimate Company ITR Filing Checklist for India

To ensure a smooth and accurate filing process, meticulous preparation is key. Gathering all the necessary documents and information beforehand can save you from last-minute stress and potential errors. This company ITR filing checklist India covers the essential components you need to have in order to meet all income tax return filing requirements India.

Core Financial Documents

These documents form the backbone of your income tax return, providing a complete picture of your company’s financial health and performance for the year.

Balance Sheet & Profit and Loss (P&L) Account: Your company’s financial statements must be prepared as per the format prescribed in Schedule III of the Companies Act, 2013. These should be finalized, audited, and approved by the board of directors.
Auditor’s Report: Every company, irrespective of its turnover or profit, is required to have its accounts audited by a qualified Chartered Accountant. This statutory audit report is a mandatory attachment to the ITR.
Tax Audit Report (Form 3CA/3CB and 3CD): If your company’s total sales, turnover, or gross receipts from business exceed ₹1 crore in the financial year, a tax audit under Section 44AB of the Income Tax Act is mandatory. This threshold is ₹10 crore if at least 95% of receipts and payments are made through digital modes. The Chartered Accountant performing the audit submits this report directly to the tax portal.

Director and Shareholder Information

The ITR form requires detailed information about the company’s key personnel and ownership structure.

A complete list of all directors and shareholders of the company as of the end of the financial year.
The Director Identification Number (DIN) and Permanent Account Number (PAN) for every director.
A valid Class 2 or Class 3 Digital Signature Certificate (DSC) of the director authorized to sign the return. E-filing of a company’s ITR is not possible without a DSC.

Tax and Payment Details

This includes all information related to the taxes paid by or on behalf of the company throughout the year.

The PAN and Tax Deduction and Collection Account Number (TAN) of the company.
Detailed challans or records of all Advance Tax and Self-Assessment Tax payments made.
Complete records of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS).
Form 26AS: This is your tax passbook, which can be downloaded from the income tax portal. It’s crucial to reconcile the TDS/TCS amounts claimed in your return with the amounts reflected in Form 26AS to avoid discrepancies and notices.

Demystifying the Core Income Tax Return Compliance Requirements

Beyond documentation, understanding the technical and legal framework is crucial for fulfilling your company’s tax obligations. The core income tax return compliance requirements involve selecting the right form, applying the correct tax rates, understanding special provisions like MAT, and making all necessary disclosures. This is where professional guidance becomes invaluable for ensuring complete and accurate corporate tax return compliance India.

Selecting the Correct ITR Form: ITR-6

The Income Tax Department has different ITR forms for different categories of taxpayers. For companies, the designated form is ITR-6. It is important to note that this form is applicable to all companies except those claiming an exemption under Section 11, which relates to income from property held for charitable or religious purposes. Companies claiming such exemptions must file ITR-7. Filing for companies must be done electronically through the income tax portal, and it is mandatory to use a Digital Signature Certificate (DSC) to sign and verify the return.

Understanding Corporate Tax Slabs and Calculations

Unlike individuals who are taxed based on slabs, companies are generally taxed at a flat rate. However, the applicable rate can vary based on turnover and whether the company opts for a special tax regime.

Company Category	Turnover Criteria (for FY 2021-22)	Applicable Tax Rate (for AY 2023-24)
Domestic Company	Turnover up to ₹400 crore	25% + Surcharge & Cess
Domestic Company	Turnover exceeds ₹400 crore	30% + Surcharge & Cess
New Manufacturing Co. (Sec 115BAB)	Incorporated on or after 01-10-2019	15% + Surcharge & Cess
Opting for Concessional Regime	Section 115BAA	22% + Surcharge & Cess

The government introduced a concessional tax regime under Section 115BAA, allowing companies to pay tax at a reduced rate of 22% (plus applicable surcharge and cess). However, to avail of this, the company must forego certain deductions and exemptions, such as additional depreciation and specified deductions under Chapter VI-A. For the most current rates and provisions, it is always advisable to refer to the official Income Tax Department website.

Minimum Alternate Tax (MAT)

A key aspect of compliance requirements company tax return India is the concept of Minimum Alternate Tax (MAT) under Section 115JB. Often, companies with substantial profits as per their P&L account end up paying very little or no tax due to various exemptions, deductions, and depreciation allowances available under the Income Tax Act. To address this, MAT was introduced.

In simple terms, MAT is a minimum tax a company must pay on its “book profit.” If the tax payable as per the normal provisions of the Act is lower than 15% (plus surcharge and cess) of its book profit, the company must pay MAT at that rate. Any MAT paid in excess of the normal tax liability can be carried forward as a MAT credit for up to 15 subsequent assessment years and can be used to offset tax liability in years when the normal tax payable is higher than the MAT liability.

Reporting Requirements: Schedules and Disclosures

ITR-6 is an extensive form with numerous schedules that require detailed disclosures. This complexity underscores the need for professional assistance. Some of the mandatory schedules include:

Part A – General: Basic company information, filing status, and audit details.
Schedules for Balance Sheet and P&L: Detailed breakdown of assets, liabilities, income, and expenditure.
Schedule DPM & DOA: Calculation of depreciation on plant & machinery and other assets.
Schedule BP: Computation of income from business or profession.
Schedule MAT: Computation of Minimum Alternate Tax liability.
Schedule GST: Details regarding turnover and refunds as per GST returns filed.

Due Dates and Penalties: The Cost of Non-Compliance

Timeliness is as important as accuracy in tax compliance. The Income Tax Act lays down strict deadlines for filing returns, and failing to meet them can result in significant financial and legal consequences.

Key Due Dates for Company Income Tax Return Filing in India

The due dates for filing a company’s ITR depend on whether an audit or specific reporting is required.

For companies requiring an audit: The due date is 31st October of the assessment year. Since all companies must undergo a statutory audit, this is the most common deadline.
For companies with international or specified domestic transactions: If the company is required to furnish a report under Section 92E (related to transfer pricing), the due date is extended to 30th November of the assessment year.

Disclaimer: These dates are subject to change. The government often extends deadlines based on various factors. It is highly recommended to check the official income tax portal for the latest updates and notifications.

Consequences of Missing the Filing Deadline

Non-compliance with filing deadlines attracts a range of penalties:

Late Filing Fee (Section 234F): A penalty is levied for filing the return after the due date. The fee is ₹5,000 if the return is filed before 31st December of the assessment year, and ₹10,000 thereafter. For small companies with total income up to ₹5 lakh, the maximum penalty is ₹1,000.
Interest on Unpaid Tax (Section 234A): If there is any tax liability outstanding, interest at a rate of 1% per month or part of a month is charged on the unpaid amount from the due date until the date of actual filing.
Loss of Benefits: This is often the most significant consequence. If a company files its return late, it cannot carry forward certain losses, such as business losses (speculative or non-speculative) and capital losses, to future years.

Conclusion

Filing a company’s income tax return is a meticulous, multi-step process that demands careful attention to documentation, accurate tax calculations, and strict adherence to deadlines. Meeting all income tax return compliance requirements is not merely a legal formality; it is a fundamental pillar of good corporate governance that builds trust with stakeholders and ensures your business remains in good standing with the law. By understanding your obligations, maintaining organized records, and staying informed about deadlines, you can navigate the complexities of tax season with confidence.

Navigating the complexities of company income tax return filing in India can be daunting. Let the experts at TaxRobo handle your tax compliance, so you can focus on growing your business. Contact us today for a hassle-free filing experience!

FAQs

1. Is it mandatory for a newly incorporated company to file an ITR if it hasn’t started business operations?

Answer: Yes. Every company registered in India must file an ITR from the year of its incorporation, regardless of whether it has commenced business operations or earned any income. This is known as filing a ‘Nil’ return and is a mandatory compliance requirement.

2. What is the difference between a statutory audit and a tax audit for a company?

Answer: A statutory audit, mandated by the Companies Act, 2013, is compulsory for every registered company and focuses on verifying the accuracy and fairness of its financial statements. A tax audit, on the other hand, is mandated by the Income Tax Act, 1961, and is required only if the company’s turnover exceeds a specific threshold. Its purpose is to ensure the company has complied with all tax provisions and computed its taxable income correctly. Both reports are crucial for meeting the compliance requirements company tax return India.

3. What is a Digital Signature Certificate (DSC) and why is it mandatory?

Answer: A Digital Signature Certificate (DSC) is the electronic equivalent of a physical or handwritten signature. For companies, it is mandatory for the authorized director to use a DSC to e-sign and file the ITR-6 form. This ensures the authenticity, integrity, and security of the electronic submission to the Income Tax Department.

4. Can a company revise its income tax return after filing?

Answer: Yes, a company can file a revised return under Section 139(5) of the Income Tax Act if it discovers any omission or wrong statement in the original return. This must be done before three months of the end of the relevant assessment year or before the completion of the assessment by the tax department, whichever is earlier.

Income Tax Return Compliance Requirements: A Quick Guide