How to File Income Tax and Audit for a Small Private Limited Company

If you have a small private limited company with a total of 10 transactions and very low income, you should be glad to know that tax audit is not required in your case. The requirement for tax audit is based on your annual turnover. In the case of private limited companies, tax audit is not required if your annual turnover is below 5 million INR. This is a significant relief for businesses of your scale.

Specific Requirements for Tax Audit

According to the Income Tax Act, tax audit is generally required for any entity, whether an individual, Hindu Undivided Family (HUF) or company, if its turnover exceeds 1 crore (10 million INR). However, if the assesse opts for presumptive income, then the limit is 2 crores (20 million INR).

For entities with an annual turnover below 1 crore, no tax audit is required. This means that for your company, you can either file your return on your own or engage a practitioner to assist you. The good news is that you do not need to undergo a tax audit due to the low turnover and income generated by your business.

Economic Benefits and Practical Steps

With so much financial pressure, focusing on business growth rather than unnecessary formalities like audit can be a smart move. Arrangements for Income Tax Filing are straightforward for a small business like yours.

Steps for Filing Income Tax Returns: If your business has a turnover below 1 crore, you can file your return yourself. Contact a Chartered Accountant (CA) for expert guidance, especially if there are any complex or unusual financial transactions that may require additional clarification. You can opt for professional help at a lower cost than market averages. Ensure that you keep all necessary documentation and receipts for future reference and audit purposes, even if it's not required now.

Cost Considerations for Professional Help

For small private limited companies, the minimum fee charged by a Chartered Accountant (CA) for tax filing can range from 5000 to 7500 INR. If you have a GST-pertinent business, the fee may be slightly higher due to the additional complexities involved in accounting for GST.

There are several reasons why a lower fee may be appropriate for small businesses: Simple tax structure with lower income and minimal transactions. Lower compliance requirements compared to larger corporations. Reduced risk of complications or errors in tax reporting.

However, it is important to note that the cost of a CA can vary depending on the specific requirements and the complexity of your business. You can discuss these details with your CA to get a more precise quote.

Conclusion and Final Thoughts

For very small businesses like yours, the burden of a tax audit can often be a significant cost burden. Given your current situation, tax audit is not applicable, and you can focus on growing your business without the added burden of unnecessary paperwork.

If you choose to engage a professional, be prepared to pay a reasonable fee, but remember that such services can provide peace of mind and ensure that your returns are filed accurately. It's always wise to seek professional advice, especially when dealing with the complexities of tax laws.

In conclusion, for a small private limited company with 10 transactions and very low income, there is no need for a tax audit. Carefully consider the costs and benefits of professional assistance and take the next step that works best for your unique situation.