ITR Filing 2023: What Professionals Need To Do To Ease The Process

Professionals and business owners often wear different hats. But when it comes to filing their tax returns, they will have to tie it all together to avoid any discrepancies. The filing of the returns on taxes paid by their business is important, of course, but so is their personal return.

Here are a few factors that a business owner or professional taxpayer must bear in mind:

Every professional or person who has a business has a dual responsibility, where one part relates to the completion of the requirements related to the business or profession, and the other one relates to the personal details.

When the individual is filing their personal tax return, they need to ensure that the business or professional income details are correctly incorporated in their returns.

This is an area where there can be a lot of problems because the figure has to match between what has been shown in the returns of the business or profession, and what they are showing in their individual books.

The nature of the entity that is being used to run the business is also important because it will determine the type of income that is coming in and the impact that this will have on their tax liability.

Some incomes like salary from a partnership firm or dividends from a company are taxable in their hands, while others, such as profit from a partnership firm are tax-free because they have already been taxed in the hands of the business entity.

There can be several incomes that are received by the professional or business person in their personal capacity, on which there is no tax deduction at source.

An example of this could be salary from a partnership firm. If this is the case, then there would be a need to pay the required amount of advance tax, and if there is a shortfall here, then there would be a heavy burden—including interest—that would need to be cleared.

The details of all the taxes paid have to be collected and the necessary credit has to be taken while the income tax return is being filed. This is one area that cannot be missed and hence, it will provide the necessary relief in the overall process.

It is very easy for a person to get confused between their business actions and their personal actions. Often, this spills over into the tax space with details that are related to one area being reflected in the other. It can be with respect to income earned or taxes paid or expenses claimed, but it can cause a lot of problems for both the individual as well as the business. This makes it vital that there has to be a clear distinction as to what belongs to whom and how this is exactly reflected in the tax returns. There should be no scope for confusion on this front. 

One of the most important details that a professional or a business owner needs to follow is to file their tax returns on time. There are often losses that need to be carried forward and which can be set off in the coming years, but if the return is not filed on time, this would be impossible. Sometimes, there is also a refund that has to be collected from the tax department. In this case, timely filing of returns can be beneficial.

There are a lot of requirements that have to be completed by the business or the individual, ranging from getting certificates or even receipts. The absence of these can delay the process of completion of the income calculations and the return filing and hence, this needs to be completed as quickly as possible. It is essential that a proper list of all the requirements are ready and then they are collected, so that the return process is not held up and nothing is missed out when there is a last-minute rush to file.

Arnav Pandya is founder of Moneyeduschool.