How to File Income Tax Return for Small Business in India (2025 Guide)

 Running a small business in India comes with several regulatory responsibilities—one of the most important being filing income tax returns. Whether you're a sole proprietor, a partnership, or an MSME registered under the Udyam Registration, timely and accurate filing of your returns ensures financial compliance and opens doors to growth opportunities, such as loans, subsidies, and government schemes.

Before we dive into the ITR process, let’s highlight something crucial: Having a professionally prepared Project Report for Bank Loan is not just useful for loans but also for maintaining transparency in financial records required for ITR filing, especially under schemes like PMEGP, CMEGP, and Mudra Loan.

Step-by-Step Guide to Filing an Income Tax Return for Small Businesses

1. Understand Your Business Structure

Your business structure determines the applicable ITR form:

• ITR-3: Proprietorship with business income
  
  

• ITR-5: Partnership Firms and LLPs
  
  

• ITR-6: Companies other than those claiming exemption under section 11
  
  

Whichever form you file, ensure your financials are aligned with your Detailed Project Report, especially if you're submitting a Project Report for a Bank Loan or applying for government schemes.

Explore sample formats here:
👉 Detailed Project Report Samples

2. Collect Required Documents

Before filing, gather:

• PAN, Aadhaar
  
  

• Business bank statements
  
  

• Profit & Loss Statement and Balance Sheet
  
  

• Previous year’s ITR
  
  

• TDS certificates
  
  

• GST returns
  
  

• Project Report for Loan if applying for funding
  
  

An up-to-date Detailed Project Report for Bank Loan ensures your declared income and projections are aligned across all platforms, including taxation, banking, and registration under Udyam Registration.

3. File Under Presumptive or Normal Taxation

Small businesses with turnover below ₹2 crore can opt for presumptive taxation (Section 44AD), simplifying the filing process. However, ensure the estimated profits match the figures in your Feasibility Project Report and income tax return filing.

Opting for regular taxation? You’ll need proper audited books of accounts. This is where your Detailed Project Report and loan application reports come into play.

4. File Online on the Income Tax Portal

Go to https://www.incometax.gov.in and log in using your PAN. Select the appropriate ITR form, pre-fill data, and verify all income sources.

Need help? Check out this detailed service:
👉 Income Tax Return Filing by Sharda Associates

Why a Project Report Matters for ITR and Loans

Your Project Report for Bank Loan must be consistent with what you declare in your income tax return filing. Discrepancies can lead to rejection of:

• Bank loans
  
  

• Startup subsidies
  
  

• Scheme-based funding such as PMEGP Project Report, CMEGP Project Report, and Mudra Loan Project Report
  
  

A clean track record with matching DPR and tax returns also boosts your chances in programs like Startup India Registration or participation in Invest Global in Madhya Pradesh.

For Agriculture & Allied Businesses

If you’re in dairy, poultry, or livestock, a special Project Report for National Livestock Mission is also needed alongside your ITR filings to avail schemes and loans.

This adds weight to your Detailed Project Report for Bank Loan, especially if backed by real financial data in your income tax filings.

Bonus: Boost Your Business With a Pitch Deck

A Pitch Deck isn’t just for investors. It complements your Detailed Project Report and can be helpful when you apply for business accelerators, startup contests, or funding rounds that require tax compliance and documentation.

Common Mistakes to Avoid

• Not maintaining consistency between ITR, Udyam Registration, and Project Report.s
  
  

• Filing without verifying your Feasibility Project Report
  
  

• Ignoring scheme-specific DPRs like PMEGP Project Report or Mudra Loan Project Report
  
  

• Using outdated formats of the Project Report for Bank Loan
  
  

Conclusion

Income tax return filing for small businesses in India may seem daunting, but it becomes manageable when you keep your reports, documents, and registrations aligned. From Udyam Registration to Project Report for Bank Loan, and from Feasibility Project Report to CMEGP Project Report, consistency and professionalism are key.

Need expert help? Visit Sharda Associates to get personalized assistance for your ITR filing, DPR preparation, and subsidy applications. For additional information or assistance, please contact us at +91-8989977769.