For a shop, a workshop or a small services business, an income tax return is doing double duty. It settles your tax position, and it produces the only widely accepted proof of what you earn.
That second job is the one people underrate. A bank assessing a loan, a landlord assessing a tenant, an embassy assessing a visa application and a tender committee assessing a bidder all ask for returns. Informal books, however accurate, do not substitute.
Filing below the threshold
If your income is below the taxable limit you may not be obliged to file, but there are common situations where filing anyway is the right call: you want a credit history, you expect to apply for a loan, you want a refund of tax already deducted, or you carry a loss you want to set against future years.
There are also conditions under which filing becomes mandatory regardless of income level, tied to things like foreign assets and certain high-value transactions. If any of those might apply to you, check rather than assume.
What to keep through the year
The single highest-value habit is keeping business money in a business account. Mixed personal and business banking is the reason most small-business filings take longer than they should.
- Bank statements for every account the business uses - including personal accounts money passes through.
- Sales records and purchase invoices.
- Rent, salary, electricity and other expense receipts.
- Form 26AS / the annual information statement, which shows tax already deducted against your PAN.
- GST returns, if registered, since they should reconcile with what you declare.
- Loan statements, where interest is claimed.
An ITR is not an income certificate
They are different documents from different authorities and are not interchangeable. An income tax return is your declaration to the tax department. An income certificate is the state's certification of family income for scholarships and welfare schemes. Institutions ask for one specifically and will usually not take the other.
Deadlines and consequences
Due dates are set each year and vary by the type of taxpayer, so check the current year's dates rather than relying on last year's. Late filing attracts a fee and can cost you the ability to carry losses forward, which for a business having a bad year is often the larger loss.
We prepare and file returns for individuals and small businesses. Bring the records above and we will tell you what is missing before we start, not halfway through.