The income tax is a matter that every businessman and professional has to consider seriously in India. Whether one runs a small business, a large enterprise, or a professional practice, one must know the income tax regulations for his category. Moreover, there are many new updates and amendments in the income tax for businessman and professionals introduced with the Budget 2025, so remaining cautious is imperative.

So, to help you in remaining compliant with the income tax department’s guidelines, in this article, we will go into detail about income tax for businessman and professional, such as tax slabs, deductible expenses, income tax deductions for businessman, applicable forms, instructions on filing, and much more. With this guide, we hope that you will have a straightforward yet insightful understanding of how to go about managing your income tax responsibilities. 

So, let’s dive in and learn all the details that you need to know.

What is Business and Profession Income Tax?

Business income tax applies to income earned from activities involving the sale and purchase of goods or services with profit in mind, such as manufacturing, trade, or commerce. Profession income tax applies to income earned from occupations requiring specialized intellectual skills, like doctors, lawyers, architects, or consultants. 

Both types of income are taxed under the Income Tax Act, 1961, with specific provisions and deductions available for business and professional taxpayers.

Latest Updates for the AY 2025-26: Income Tax for Businessman & Professional

The newly introduced Income Tax Bill in the Lok Sabha by the finance minister is aiming to make tax provisions simpler and clearer, especially concerning income tax for business and individual taxpayers. Under the newly concluded tax regime, from the Budget 2025, no tax would be levied for income upto ₹12,00,000 for the FY 2025-26 (AY 2026-27). This is how it works.

New Tax Slabs for AY 2026-27

New revisions for slab rate under the new regime for FY 2025-26 (AY 2026-27) are: 

Annual Income	Income Tax Rate
Upto ₹4,00,000	Nil
₹4,00,001 to ₹8,00,000	5%
₹8,00,001 to ₹12,00,000	10%
₹12,00,001 to ₹16,00,000	15%
₹16,00,001 to ₹20,00,000	20%
₹20,00,001 to ₹24,00,000	25%
Above ₹24,00,001	30%

Tax Rebates (ITR for businessman or professional) for AY 2026-27

Under the revised new tax regime for FY 2025-26, those earning less than ₹12 lakhs will be totally exempted from tax due to an increase in the rebate limit of ₹60,000. Whereas, the new regime gave a tax rebate of ₹25,000 under Section 87A, admissible to individuals whose net taxable was below ₹7 lakhs. However, no rebate is given to income taxed at special rates like the capital gains under Section 112A. 

Tax Slabs for AY 2025-26- Old Tax Regime vs. New Tax Regime

The key difference between the old tax regime and the new tax regime is the availability of deductions.

The old tax regime offers a number of deductions-exemptions such as HRA, LTA, sections 80C and 80D, and lower tax rates ranging from nil for incomes up to ₹2,50,000 and 30% for incomes exceeding ₹10,00,000. On the contrary, the new tax regime is a simplified one with less or zero deductions. And, incomes below ₹4,00,000 are taxed nil; anything above ₹24,00,000 is taxed at 30%. 

The old regime appears to be more beneficial for taxpayers with many deductions. However, ultimately your selection should depend on your own situation and the different ways through which you may save tax. 

But, you need to know that individuals, Hindu Undivided Families, Association of Persons, Bodies of Individuals, or artificial persons with business or professional income are not allowed to switch between the old and new tax regimes every year. They may revert to the old regime if they have opted out of the new one, but only once. Once they return to the new regime, they cannot go back to the old one in the future.

A. Old Tax Regime (With deductions and exemptions) 

Budget 2025 has not announced any changes in the tax slab under the old tax regime. Therefore, the tax slabs under the old regime stand as follows.

Annual Income	Income Tax Rate (for individuals below 60 years)
Up to ₹2.5 lakh	Nil
₹2,50,001 to ₹5,00,000	5%
₹5,00,001 to ₹10,00,000	20%
Above ₹10 lakh	30%

Annual Income	Income Tax Rate (For senior citizens aged 60 to 79 years)
Up to ₹3,00,000	No tax
₹3,00,001 – ₹5,00,000	5% of income over ₹3,00,000
₹5,00,001 – ₹10,00,000	₹10,000 + 20% of income over ₹5,00,000
Above ₹10,00,000	₹1,10,000 + 30% of income over ₹10,00,000

Annual Income	Income Tax Rate (For super senior citizens aged above 80 years)
Up to ₹5,00,000	Nil
₹5,00,001 – ₹10,00,000	20% of income over ₹5,00,000
Above ₹10,00,000	₹1,00,000 + 30% of income over ₹10,00,000

B. New Tax Regime (Without Deductions and Exemptions) for AY25-26

Annual Income	Income Tax Rate
Upto ₹3,00,000	Nil
₹3,00,001 to ₹7,00,000	5%
₹7,00,001 to ₹10,00,000	10%
₹10,00,001 to ₹12,00,000	15%
₹12,00,001 to ₹15,00,000	20%
Above ₹15,00,001	30%

C. New Tax Regime (Without Deductions and Exemptions) for AY26-27 

Annual Income	Income Tax Rate
Upto ₹4,00,000	Nil
₹4,00,001 to ₹8,00,000	5%
₹8,00,001 to ₹12,00,000	10%
₹12,00,001 to ₹16,00,000	15%
₹16,00,001 to ₹20,00,000	20%
₹20,00,001 to ₹24,00,000	25%
Above ₹24,00,001	30%

How to Maximize Income Tax Deductions for Businessman?

You can maximize deductions for businesses using the following commonly known deductions:

Section	Deduction	Details
80C	Investments in PPF, ELSS, NSC, etc.	Maximum ₹1.5 lakh deduction on eligible investments.
80D	Health Insurance Premiums	Up to ₹25,000 (₹50,000 for senior citizens).
80E	Education Loan Interest	No upper limit on the interest paid.
80G	Donations to charitable institutions	50-100% deduction based on the institution.
80GGB/GGC	Political Contributions	100% deduction on contributions made to political parties.
80JJAA	Additional Employee Cost	Applicable for businesses that create new employment.
Section 35AD	Capital Expenditure in Specified Businesses	100% deduction for specific sectors (e.g., cold chain facilities).

Tax Saving Options for Businessman: Deductions Specific to Business Income

Under the Income Tax Act, 1961, businesses can claim income tax deductions for businessman on eligible business expenses, providing significant financial relief.

Key Deduction Sections:

• Sections 30-36: Cover specific deductions for rent, utilities, salaries, depreciation, and interest on loans.
• Section 32 (Depreciation): Allows depreciation claims on fixed assets like machinery, furniture, buildings, and vehicles.
• Section 36 (Interest on Business Loans): Provides a full deduction for interest paid on business-related loans.
• Bad Debts (Section 36): Written-off debts can be claimed as deductions, improving business cash flow.

Presumptive Taxation for Business and Profession Income Tax

The Income Tax Act provides in the framework of rules and regulations that every such profession or business practice has to maintain regular books of account and accordingly, be audited.

Thus, to ease hardships and burdens from small taxpayers posed by these provisions, the presumptive taxation scheme as per sections 44AD, 44ADA, and 44AE has been framed.

A person who adopts the presumptive taxation scheme is in a position to declare income at various specified rates, thus relieving them of the otherwise tedious and cumbersome job of finalizing the accounts and getting the accounts audited. 

A. Presumptive Taxation for Businesses (Section 44AD)

Eligibility:

• Applicable to: Small businesses opting for simplified taxation under Section 44AD of the Income Tax Act.
• Turnover Limit:
  • Up to ₹2 Crores: When cash receipts exceed 5% of total receipts.
  • Up to ₹3 Crores: When cash receipts are 5% or less of total receipts.

Income Declaration:

• 8% of turnover for non-digital transactions.
• 6% of turnover for digital transactions.

Key Benefits:

• No need to maintain detailed books of accounts.
• No audit requirements, easing compliance for small businesses.

Exceptions: Businesses involved in the following are not eligible for presumptive taxation under Section 44AD:

• Life insurance agents.
• Commission-based income.
• Businesses of plying, hiring, or leasing goods carriages, as they fall under Section 44AE.

B. Presumptive Taxation for Professionals (Section 44ADA)

Eligibility:

• Applicable to professionals, such as doctors, lawyers, architects, accountants, and other specified professionals with gross receipts up to ₹75 lakh.

Income Declaration:

• 50% of gross receipts are considered presumed income.

Key Benefits:

• Simplified compliance with no audit requirements.
• Professionals can focus on their practice without worrying about complex tax filings.

ITR Forms for Business Person 

Filing the correct Income Tax Return (ITR) form is crucial for businessmen and professionals. The applicable forms depend on the nature of income, business type, and turnover.

1. ITR-3: For Individuals and Hindu Undivided Families (HUF)

ITR-3 is applicable to Individuals and Hindu Undivided Families (HUF) under the following conditions:

• The taxpayer has income under the head ‘Profits or Gains of Business or Profession.’
• The taxpayer is not eligible to file ITR-1, ITR-2, or ITR-4 (SUGAM).

Suitable for:

• Business owners and professionals with non-presumptive income.
• Taxpayers with complex income sources, such as partnership income, interest, salary, bonus, and more.

2. ITR-4 (SUGAM): For Individuals, HUFs, and Firms (Excluding LLPs)

ITR-4 (SUGAM) is a simplified income tax return form designed for:

• Individuals, HUFs, and Firms (excluding LLPs).
• Taxpayers opting to declare Profits and Gains from Business or Profession on a presumptive basis under Section 44AD, 44ADA, or 44AE of the Income Tax Act, 1961.

Eligibility Criteria:

• If the total income does not exceed ₹50 lakh, filing of ITR-4 is allowed.
• Applicable to business, salary, pension, one-house property, and other sources of income (excluding lottery and racehorse income). 

Cases Where ITR-4 (SUGAM) Cannot Be Used:

ITR-4 (SUGAM) is not applicable if the taxpayer:

• Possesses Directorship in the company.
• Holds unlisted equity shares at any time during the previous financial year.
• Possesses any financial interests outside India including assets.
• Has signing authority in any accounts located outside India.
• Earns income from any source outside India.
• Has deferred tax payment or deduction on ESOPs.
• Has carried forward losses or losses to be carried forward under any head of income.
• Possesses total income of more than ₹50 lakhs. 

Please note that ITR-4 is an optional, not mandatory form meant for eligible taxpayers who opt for simplified assessment under the presumptive taxation scheme.

Key Income Tax Forms: Purpose, Providers & ITR Form for Business Person

Form	Provided/Submitted by	Purpose	Details Included
Form 16A	Deductor to Deductee	Certifies TDS on income other than salary (interest, commission, rent, professional fees)	Amount credited to deducteeAmount of TDS deductedNature of paymentsTDS payments deposited with the Income Tax Department
Form 26AS	Available on e-Filing Portal (Login > e-File > Income Tax Return > View Form 26AS)	Provides a summary of tax credits and deductions	Tax Deducted/Collected at Source Advance Tax/Self-Assessment Tax (SAT)Refund details- Specified Financial Transactions (SFT)TDS under Sections 194IA, 194IB, 194M- TDS defaults, if any
Annual Information Statement (AIS)	Available on the e-Filing Portal (Login > AIS)	Gives a broader overview of financial transactions	Tax Deducted/Collected at SourceSFT Information- Payment of taxesDemand/Refund statusAdditional details (e.g., GST information)
Form 3CB-CD	Taxpayers requiring an audit under Section 44AB	Audit report for taxpayers with income exceeding prescribed limits	Form 3CB: Audit Report of AccountsForm 3CD: Statement of ParticularsMandatory for businesses requiring a statutory audit
Form 15G	Resident taxpayers (Individuals below 60 years, HUFs, other persons excluding companies & firms)	Declaration to avoid TDS deduction on interest income if total income is below the exemption limit	Commonly submitted to banks for FD, RD, and savings account interest
Form 15H	Resident individuals aged 60 years or above	Declaration to avoid TDS deduction on interest income if total income is below the taxable limit	Commonly submitted to banks for FD, RD, and savings account interest by senior citizens
Form 3CEB	Taxpayers involved in international or specified domestic transactions	Ensures compliance with transfer pricing regulations	Mandatory CA report under Section 92EDeadline: At least one month before ITR filing due date under Section 139(1)Details of all international and specified domestic transactions

You can download all the above forms from https://www.incometax.gov.in/iec/foportal/downloads. 

ITR Filing Checklist for Businessmen & Professionals

Before you begin filing your ITR, make sure you have all the necessary documents and details ready. Here’s a quick checklist to help you stay organised!

How to File Income Tax Return Online for Businessman & Professional

Filing income tax for businessman is not a problem. This step-by-step guide provides a broad outline of how to file ITR for businessmen and professionals.

Prerequisites for ITR-4 filing:

• Registered on the e-filing portal with a valid User ID and password.
• PAN is active, and the taxpayer is a resident.

Important steps:

• Link PAN with Aadhaar to avoid going inoperative status.
• Pre-validate at least one bank account for refund processing.
• Ensure valid mobile number linked with Aadhaar, e-filing portal, bank, NSDL/CDSL.
• You can also download the offline utility or use third-party software for offline filing.

Here’s how to file ITR for businessmen/professionals

• Log in to the e-filing portal through your User ID and password.
• Navigate to e-file > Income Tax Returns > File Income Tax Return.
• Select an assessment year and online mode of filing.
• Choose the applicable status and click on continue.
• Select the applicable form and proceed.
• Read instructions very carefully, make note of the documents required, and then click ‘Let’s Get Started.’
• Review pre-filled data, edit if needed, and confirm each section.
• Enter income and deduction details, and click continue.
• Either pay now or pay later if there is tax due. Nevertheless, it is advisable to go for “Pay now”.
• In case of no demand/ no refund or eligible for a refund, Preview Return.
• After successful payment, click back to return filing.
• Click preview return.
• On the preview and submit your return page, confirm the details and click Preview.
• Click Proceed to Validation.
• If there are no errors, click Proceed to Verification.
• Choose an e-Verification method (recommended) for fast and safe verification.

Some important tips:

• Default Tax Regime: The New Tax Regime is the default for AY 2024-25.
• To opt-out, select “Yes, within due date” or “Yes, beyond due date,” and fill in Form 10-IEA details. 

Common Mistakes to Avoid While Filing ITR for Business/Profession

Filing Income Tax Returns (ITR) for businessmen and professionals requires caution to avoid errors that could lead to penalties or tax scrutiny.

1. Incorrect ITR Form Selection:
   
   • Always use ITR-3 for normal business income and ITR-4 for presumptive taxation.
2. Not Reporting All Income Sources:
   
   • Include business income, professional fees, investment returns, and other sources.
3. Improper Claim of Deductions:
   
   • Avoid inflating expenses or misusing deductions, which can trigger tax scrutiny.
4. Skipping the Balance Sheet & P&L Statement:
   
   • Especially needed when filing ITR-3.
5. Ignoring Advance Tax Payments:
   
   • Avoid interest under Sections 234B and 234C by paying advance tax on time.
6. Mismatch in Reported Income:
   
   • Ensure income reported matches Form 26AS, AIS, and TIS data.

Assisted ITR Filing or Businessman or Professional

We know filing ITR for businessman or professionals can be overwhelming and confusing, and that’s where you can get help from assisted filing. Assisted Filing means getting a bit of extra help with your ITR. You can turn to a chartered accountant (CA), a tax consultant, or even use the ITR filing services offered by various tax filing platforms. 

A. Benefits of Assisted Filing:

• Accuracy: Reduces the chances of errors.
• Compliance: Ensures all regulatory requirements are met.
• Tax Optimization: Professionals can guide on maximizing deductions and tax-saving options.

B. How to Choose the Right Assisted Filing Service:

• Experience & Expertise: Look for CAs with business taxation experience.
• Cost vs. Benefit: Ensure the service fees justify the tax savings.
• Digital vs. Offline Services: Many platforms like ClearTax, and TaxBuddy offer digital assistance.

Income Tax Calculator: How to Use It

If you’re prefer a DIY approach or are just seeking a quick estimate before filing, consider using an Income Tax Calculator. An Income Tax Calculator is a simple online tool through which businessmen and professionals can calculate their tax liabilities based on income, deductions, and various tax regimes. 

Income Tax Department of India has also launched an income and tax calculator on its official e-filing portal that helps registered as well as unregistered users calculate their taxes, according to the Income Tax Act, rules, and notifications. Moreover, after inputting the income details and deductions, taxpayers can quickly compare their tax liabilities for both the old tax regime and the new tax regime.

To access the official Income Tax Department’s tax calculator, you can follow these steps:

1. Visit the e-filing portal homepage.

2. Go to Quick Links > Income and Tax Calculator.

3. Choose calculator type:

• You’ll see two tabs: Basic Calculator (default) and Advanced Calculator.

A. Using the Basic Calculator:

• Enter details like Assessment Year (AY), taxpayer category, age, residential status, total annual income, and total deductions.
• The Tax Summary section will display the calculated tax.
• Click View Comparison to see a detailed breakdown of tax under both tax regimes.

B. Using the Advanced Calculator:

• Input Details: Select your preferred tax regime, AY, taxpayer category, age, residential status, and submission dates.
• Income Details: Provide specifics for income under:
  • Salaries
  • House Property
  • Capital Gains
  • Business or Profession
  • Other Sources
• Deductions: Enter applicable deductions like PPF, LIC, Housing Loan, NPS, Mediclaim, and Higher Education Loan.
• Taxable Income: Add or adjust TDS/TCS details if you have supporting documents.

4. Review Tax Liability:

• The total tax and interest payable will be displayed at the bottom of the page.

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Benefits of Filing ITR for Business/Profession

1. Ensure compliance: Filing your ITR on time makes sure you are compliant with the Income Tax Department regulations and saves you from penalties and legal notices.

2. Swift Loan Approval: Almost all banks demand ITR copies during loan processing. With that in hand, the whole process can go faster and easier.

3. Get Your Money Back: When TDS (Tax Deducted at Source) is greater than the actual tax liability, the only means to reclaim it is by filing your ITR.

4. Carry Forward Losses Into Future Profits: Filing your ITR permits the carry-forward of business losses, which helps reduce taxes on earnings in the future.

5. Establish Financial Credibility: ITR receipts are proof of income, which can be very handy during business transactions, when applying for investments, and even for visa applications. 

Conclusion

Income tax returns for both businessmen and professionals are, besides the legally binding obligation, the opportunity to reduce their tax liabilities. With the use of presumptive taxation schemes, tax deductions, and avoidance of common pitfalls while filing, taxpayers can ensure compliance and savings.

Businessmen and professionals can keep track of standard reformations in taxes like the ones in the Budget 2025, enabling them to make elaborate financial decisions and build a sound financial base for their businesses.

In case you find it difficult to prepare your ITR then it is recommended to seek either expert assistance or reliable tax filing platforms to alleviate the chances of making mistakes while availing the eligible tax benefits. 

Income Tax for Businessman & Professional|FAQs

Source- TheEconomicsTimes , Incometax.gov.in

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