Filing your income tax return accurately and on time is one of the most important compliance obligations for any small business in Kerala. Whether you are a sole proprietor, a partner in a firm, or the owner of a private limited company, this guide covers everything you need to know about ITR filing for small businesses for FY 2025-26.
Which ITR Form Should Your Business Use?
ITR-3: For individuals and HUFs having income from profits and gains of business or profession (other than those eligible for ITR-4). This applies if you have business income that is not computed under presumptive taxation.
ITR-4 (Sugam): For individuals, HUFs and partnership firms with business income computed under presumptive taxation (Sections 44AD, 44ADA or 44AE). Turnover must be up to ₹2 crore (₹3 crore if 95% of receipts are digital) for Sec 44AD and up to ₹75 lakh (₹1.5 crore with 95% digital receipts) for Sec 44ADA.
ITR-5: For partnership firms, LLPs, BOIs and AOPs.
ITR-6: For companies (other than companies claiming exemption under Section 11).
Key Due Dates for FY 2025-26
- 31 July 2026: For individuals and firms not subject to tax audit (ITR-3, ITR-4)
- 31 October 2026: For businesses subject to tax audit (turnover above ₹1 crore for trading/manufacturing, ₹50 lakh for professionals)
- 31 October 2026: For ITR-5 (firms, LLPs) and ITR-6 (companies)
- 30 November 2026: For transfer pricing cases
Tax Audit Requirements
A tax audit under Section 44AB is mandatory if:
- Business turnover exceeds ₹1 crore in the financial year (or ₹3 crore if 95%+ receipts/payments are through banking channels)
- Profession gross receipts exceed ₹50 lakh (or ₹1.5 crore with digital transaction condition)
- Business income is declared below the presumptive limit under Section 44AD and total income exceeds the basic exemption limit
The tax audit report must be filed in Form 3CB-3CD (for non-company businesses) by 30 September and the ITR must be filed by 31 October.
Presumptive Taxation — Simplified Tax for Small Businesses
Section 44AD allows businesses with turnover up to ₹2 crore (or ₹3 crore with 95% digital transactions) to declare 8% of turnover (or 6% for digital transactions) as net profit, without maintaining detailed books or undergoing audit. This is a significant simplification for small traders and manufacturers in Kerala.
Section 44ADA provides similar benefits to professionals (doctors, lawyers, CAs, architects) with receipts up to ₹75 lakh — declared profit is 50% of gross receipts (or 50% minimum with actual expenses if higher).
Key Deductions for Small Businesses
- Section 32 — Depreciation on business assets
- Section 36 — Bad debts, employer PF contributions, insurance premium on assets
- Section 37 — All legitimate business expenditures (office rent, salaries, advertising, etc.)
- Section 80C — LIC, PPF, ELSS, home loan principal (for individual proprietors)
- Section 80D — Health insurance premium (for individual proprietors)
Conclusion
Timely and accurate ITR filing is essential for maintaining a clean compliance record, avoiding penalties and carrying forward losses. SPOTON's CA team handles income tax return filing for businesses of all sizes across Kerala — from small traders to large companies. Contact us for expert ITR services.
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