ITR for Business Income: Key Changes and Updates for FY 2024-25 Tax Filing

Filing Income Tax Returns (ITR) is crucial for anyone earning from a business in India. For Financial Year (FY) 2024-25, the Income Tax Department has introduced new changes to streamline and simplify the process for business owners. Whether you’re a freelancer, MSME, or large enterprise, understanding how to file your ITR for business income correctly will help you stay compliant and avoid penalties.

What is Business Income?

Business income is any profit or gain earned from any trade, commerce, manufacturing, or professional services. It is categorised under “Profits and Gains from Business or Profession” in the Income Tax Act, 1961.

Common Sources of Business Income:

• Sale of goods or services
• Freelancing or consultancy
• Manufacturing and production
• Export and import businesses
• Online businesses like dropshipping or affiliate marketing

ITR Forms for Business Income (FY 2024-25)

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Key Changes in ITR for Business Income in FY 2024-25

🔔 Noteworthy Update: PAN and Aadhaar are now mandatory for business owners to file ITR.

Latest Changes:

• New tax regime default: ITR forms now default to the new tax regime unless opted otherwise.
• Reporting of digital assets: Disclosure of income from crypto, NFTs, or digital currencies is now mandatory.
• GST-linked reporting: Cross-verification with GST filings has been strengthened.
• Changes in presumptive taxation thresholds:
  • Section 44AD (business): Limit raised to ₹3 crore (if cash receipts ≤ 5%)
  • Section 44ADA (professionals): Limit raised to ₹75 lakh

How to File ITR for Business Income

Step-by-Step Filing Process:

1. Collect All Financial Documents
   • Profit & Loss Account
   • Balance Sheet
   • GST Returns
   • TDS Certificates (Form 16A)
   • Bank Statements
2. Choose the Correct ITR Form
   • Use ITR-3 for regular businesses
   • Use ITR-4 for presumptive scheme under Section 44AD/ADA
3. Log in to the Income Tax e-filing Portal
   • Visit – website
   • Use PAN-linked credentials to access your account
4. Fill the ITR Form
   • Auto-populated data from AIS/TIS
   • Manually verify profit, depreciation, and expense details
5. Declare Presumptive Income (if applicable)
   • Declare 6% or 8% of total turnover (Section 44AD)
   • Declare 50% of gross receipts (Section 44ADA)
6. Pay Self-Assessment Tax (if any)
   • Use Challan 280 to pay dues
7. Submit and e-Verify
   • E-verify using Aadhaar OTP, Netbanking, or DSC

Tax Slabs for Business Income (FY 2024-25)

For Individuals and HUFs (under New Regime):

Note: Businesses can also opt for the Old Regime if they claim deductions like Section 80C, 80D, depreciation, etc.

ALSO READ | Business Income Tax Slab in India: FY 2024-25 Rates for All Business Types

Important Deductions for Business Income

Eligible Business Expenses:

• Rent of business premises
• Salaries and wages
• Depreciation on assets
• Electricity and telephone bills
• Advertising & marketing costs
• Interest on business loans

Key Sections:

• Section 35: Expenditure on scientific research
• Section 36: Insurance premiums, bonus to employees
• Section 37: General business expenditures

Presumptive Taxation: Quick Summary

ALSO READ | Income from Business and Profession: Decoding Section 28 of the Income Tax Act

Benefits of Filing ITR for Business Income

• Easy access to business loans and credit
• Helps in GST refunds and compliance
• Avoids late fees (₹1,000 to ₹5,000 under Section 234F)
• Builds credibility for vendors and investors
• Required for government tenders and contracts

Common Mistakes to Avoid

• Using the wrong ITR form
• Missing out on e-verification
• Incorrect disclosure of digital income
• Not reporting cash transactions
• Failing to reconcile with GST returns

Pro Tips for Smooth Tax Filing

• Maintain digital records of all expenses and sales.
• Regularly reconcile books with GST and bank statements.
• Use professional accounting software or consult a CA.
• File before July 31, 2025, to avoid penalties.

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Conclusion

Filing ITR for business income in FY 2024-25 has become more tech-friendly and transparent, especially with new digital disclosures and presumptive scheme updates. Staying informed, keeping proper records, and filing timely returns will save you from legal trouble and help your business grow financially.

Frequently Asked Questions (FAQs)

1. What is considered business income in India?
Any income from trade, commerce, manufacturing, freelancing, or professional services is treated as business income.

2. Which ITR form is for proprietorship businesses?
ITR-3 is used for proprietorships with regular accounting; ITR-4 is for those under presumptive taxation.

3. Can I file ITR without GST registration?
Yes, if your turnover is below the GST threshold (₹40 lakh for goods, ₹20 lakh for services).

4. What is the last date to file ITR for FY 2024-25?
The due date is July 31, 2025, for individuals and non-audit businesses.

5. Is it compulsory to file ITR if I have business losses?
Yes, to carry forward and set off losses, you must file ITR before the due date.

6. Can I switch between old and new tax regimes every year?
Yes, individual taxpayers (non-business) can switch every year. Businesses can switch once.

7. What is the penalty for not filing ITR on time?
Up to ₹5,000 under Section 234F, depending on your income.

8. Do I need a CA to file a business ITR?
Not necessarily. You can file yourself using online portals, but a CA helps if your accounts are complex.

9. Are digital currency gains taxable under business income?
Yes, if trading is frequent or business-like in nature.

10. What is the presumptive scheme benefit?
It allows small businesses and professionals to pay tax on estimated profits, reducing the need for detailed books.