ITR Filing for Business Owners — FY 2025-26 Complete Guide

Filing ITR as a business owner for FY 2025-26 is significantly more complex than as a salaried employee. You need to decide between regular accounting and presumptive taxation, determine if audit is required, and ensure your ITR turnover matches your GST filings. The new Income Tax Act 2025, applicable from FY 2026-27, will simplify some provisions but the core compliance structure remains the same.

1. Overview — Business Owner ITR for FY 2025-26

Key decisions for business ITR filing:

• Do you qualify for presumptive taxation under Section 44AD or 44ADA?
• Is your turnover above the tax audit threshold?
• Are you maintaining books of accounts?
• Do you have other income — salary, capital gains, house property?

2. ITR-3 vs ITR-4 — Which Form?

Form	Who Should Use
ITR-3	Regular accounting — turnover above audit limit, capital gains, or not eligible for presumptive
ITR-4 (Sugam)	Presumptive income under 44AD (business) or 44ADA (professionals) — total income below ₹50 lakh, no capital gains, no foreign assets

3. Presumptive Taxation Under Section 44AD for FY 2025-26

Section 44AD allows eligible businesses to declare 8% of gross turnover as presumptive income (6% for digital receipts) without maintaining detailed books. Conditions:

• Eligible: resident individual, HUF, or partnership firm (not LLP)
• Turnover not exceeding ₹2 crore per year
• Not eligible for: agency business, commission, brokerage, professionals

Section 44ADA for professionals: Doctors, lawyers, CAs, architects, engineers with gross receipts up to ₹75 lakh (increased in Budget 2024 for digital receipts) can declare 50% as presumptive income.

4. When is Tax Audit Required for FY 2025-26?

Situation	Audit Required?	Due Date
Business turnover above ₹1 crore	Yes (Section 44AB)	31st October 2026
Business turnover above ₹10 crore (all digital)	Yes	31st October 2026
Professional gross receipts above ₹50 lakh	Yes	31st October 2026
Presumptive taxpayer declaring below 8% / 50%	Yes	31st October 2026

5. Business Deductions You Can Claim

Under regular accounting (ITR-3), all legitimate business expenses are deductible:

• Rent, electricity, telephone, internet
• Salaries and wages paid to employees
• Depreciation on assets under Section 32
• Interest on business loans
• Raw material and stock purchases
• Professional fees paid to CA, lawyer, consultant
• Advertising and marketing expenses

Not deductible: Personal expenses, cash payments above ₹10,000 per day to a single person (Section 40A(3A) — reduced from ₹2 lakh to ₹10,000 for certain cases), penalties and fines.

6. Advance Tax for Business Owners — FY 2025-26

Instalment	Due Date	Minimum Amount
1st	15th June 2025	15% of annual tax liability
2nd	15th September 2025	45% of annual tax liability
3rd	15th December 2025	75% of annual tax liability
4th	15th March 2026	100% of annual tax liability

Presumptive taxpayers under 44AD/44ADA can pay entire advance tax in one instalment by 15th March 2026.

7. GST Turnover and ITR — Matching Requirement

The Income Tax Department cross-verifies your ITR turnover with GST returns. Always reconcile your GSTR-9 annual return turnover with ITR before filing both. Common mismatch issues:

• GST includes zero-rated exports; ITR may show different figures
• Exempt supplies under GST still reported in ITR
• Advance receipts in GST vs revenue recognition differences

8. New Income Tax Act 2025 — Impact on Business Owners

The new Income Tax Act 2025 applies from FY 2026-27. For business owners, key points:

• Presumptive taxation equivalent provisions are retained
• Depreciation and business deduction provisions continue in similar form
• Section 44AD equivalent will exist under new Act with similar thresholds
• For FY 2025-26 filing, file as per the existing Income Tax Act 1961