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ITR Filing for Proprietorship Firm
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ITR Filing for Proprietorship Firm - Overview
Just like other incorporated firms such as Partnerships Firm Registration and LLP Registration, Sole Proprietorship Registration also must pay tax on their earnings. As per the law proprietorship and the proprietor are considered as a single entity and are subjected to income tax returns. So, the laws that control the payment of the proprietor’s income tax return also apply to the proprietorship.
However, the income tax rates of the registered companies are fixed based on flat rates. On the other hand, a single proprietorship will not be taxed as a different legal entity. All the business owners should file their taxes as an individual return like other individual taxpayers of the country. Based on the Income-tax rules and the slab rates the proprietorship tax is also subjected to the deduction.
Why is it Necessary to File ITR for Proprietorship Firm?
- If the total income exceeds ₹3 lakhs, all owners under the age of 60 are required to file proprietorship income tax return under the Income Tax Act
- If the income exceeds ₹3 lakhs, owners above the age of 60 must file income tax for sole proprietor
- If the income exceeds ₹5 lakhs, proprietors above the age of 80 are required to file Sole Proprietorship Tax Returns.
On meeting certain conditions, Sections 10A, 10B, 80-IA, 80-IAB, 80-IB, and 80-IC will provide deductions.
Old Income Tax Slabs for Professionals Below 60 Years for FY(2022-2023) AY (2023-2024)
| Total Income Tax Range | Income Tax Rate (excluding surcharge and cess) |
|---|---|
| 0 – ₹2, 50,000 | Nil |
| ₹2, 50,001 – ₹5, 00,000 | 5% |
| ₹5, 00,001- ₹7, 50,00 | 20% |
| ₹7, 50,001- ₹10, 00,000 | 30% |
Old Income Tax Slabs for Senior Citizens for FY(2022-2023) AY (2023-2024)
| Total Income Tax Range | Income Tax Rate (excluding surcharge and cess) |
|---|---|
| 0 – ₹3,00,000 | Nil |
| ₹3,00,001 – ₹5, 00,000 | 5% |
| ₹5, 00,001- ₹10,00,000 | 20% |
| 10, 00,001 and above | 30% |
Old Income Tax Slabs for Super Senior Citizens for FY(2022-2023) AY (2023-2024)
| Total Income Tax Range | Income Tax Rate (excluding surcharge and cess) |
|---|---|
| 0 – ₹5,00,000 | Nil |
| ₹5,00,001 – ₹10, 00,000 | 20% |
| ₹10, 00,001 and above | 30% |
New Income Tax Slabs for FY(2022-2023) AY (2023-2024)
| Total Income Tax Range | Income Tax Rate (excluding surcharge and cess) |
|---|---|
| 0 – ₹2, 50,000 | Nil |
| ₹2, 50,001 – ₹5, 00,000 | 5% |
| ₹5, 00,001- ₹7, 50,00 | 10% |
| ₹7, 50,001- ₹10, 00,000 | 15% |
| ₹10, 00,001 – ₹12, 50,000 | 20% |
| ₹12, 50,001 – ₹15, 00,000 | 25% |
| ₹15, 00,001 and above | 30% |
Documents Required for Proprietorship Income Tax Return Filing
As a sole proprietor, the following documents are required for ITR filing for Proprietorship Firm:
- PAN card
- Aadhar card
- Bank account details
- Form 16, 16A and 26AS
- Advance tax payment challan
How to File Income Tax Returns for Proprietorship Firm?
The income tax for proprietorship is the proprietor’s income tax and it is crucial to be filed every year without fail. The E-sign of the Proprietor Income Tax Return will be used to file the proprietorship ITR. Based on the type of proprietorship you will have to submit two different forms. Initially, you will have to submit all the required documents including your PAN card to our experts
- ITR 3 Form: If the proprietorship is run by a hindu undivided family (HUF) or any other owner
- ITR 4 Form: This one is used by proprietorships that are subject to presumptive tax schemes. Filing this form will reduce the burden of compliance for small businesses and still provide you with the deductions of HUFs.
Subsequently, our experts will register ITR for proprietorship in the official portals. The assessment year and proprietorship ITR filing type will be chosen based on the scenario. You will be provided the required confirmation after completing the process.
Due Date for Proprietorship Income Tax Return Filing
Losses in the business, if any, can be carried forward if the proprietor ITR files an income tax return before the deadline
- If the audit is not necessary the Proprietorship Income tax return should be filed by 31 July of every year
- If the audit is necessary, income tax return filing has to be done on 31 October of every year.
Presumptive Taxation Scheme
This scheme was introduced by the Indian government to help small businesses and professionals to file their tax returns easily. Here is some detailed information on the Presumptive Taxation Scheme in India:
Eligibility
This Scheme is available to small businesses and professionals whose annual turnover is less than ₹2 crores. It is applicable to both the businesses and Professionals such as lawyers, doctors, architects, and other specified professions with gross receipts of up to ₹50 lakhs.
Taxation Rates
For small businesses engaged in manufacturing or trading, the taxation rate is 8% of the total turnover. For professionals such as doctors, lawyers, and other specified professions, the taxation rate is 50% of the gross receipts. The Presumptive Taxation Scheme offers several benefits to eligible small businesses and professionals, such as:
- Simplified tax filing process
- Reduced tax liability
- Avoidance of tax audits.
Audit for Proprietorship
Depending on the annual turnover of the proprietorship, auditing may be necessary under the following scenarios.
- During the assessment year, the turnover of the proprietorship firm conducting business exceeds ₹1 crore
- In the case of a professional proprietorship, an audit is required if the total receipts of the business exceed ₹50 lakh
- An audit is required whenever a proprietorship is subject to any presumptive tax scheme, regardless of yearly turnover.
As per the Income Tax Act of 1961 the proprietorship firm’s audit must be performed by a certified Chartered Accountant. Don’t worry if you don’t have a CA at your disposal, Vakilsearch will cover you with that!
Why Dreamunicus?
If you are looking for a one-stop solution to file your proprietorship income tax returns then Dreamunicus is the best option. We have our in-house chartered accountants who can audit your income complying with all the terms and conditions explained in the Income-tax Act. All you have to do is reach out to our experts. They will complete proprietorship ITR filing in just 3 legit steps in the most affordable range.
When compared to other competitors we provide the most affordable pricing to file your income tax returns for Proprietorship Firm.
| Category | Charges |
|---|---|
| ITR for Sole Proprietors – Presumptive | ₹1499 |
| ITR for Sole Proprietors – Non Presumptive with books | ₹4999 onwards |
Our experts deal with more than 1000 companies in a month in multiple legal disciplines. Apart from the firms we also have a large number of individuals who choose Form ITR3 and form ITR4 have to be filed for proprietorship income tax returns. You can also reach out to Dreamunicus for filing them online. for all their legal aspects. Trust us, Dreamunicus can make all your legal aspects simple!
Frequently Asked Questions (Faq)
Form ITR3 and form ITR4 have to be filed for proprietorship income tax returns. You can also reach out to Dreamunicus for filing them online.
Yes, as per the Income-tax Act all the proprietors who are less than 60 years of age and Hassan income of more than ₹2.5 lakhs should file Proprietorship ITR.
ITR2 is filed by resident individuals who have a total income tax exceeding ₹50 lakh. And is usually filed by individuals who own more than one house property. So an individual taxpayer having income through a business cannot use ITR2.
Auditing the Income Tax is mandatory if the sales or turnover causes ₹1 crore. Since the Proprietorships forms for taxes to individuals under the Income tax Act auditing becomes mandatory.
Technically speaking sole proprietors should pay the entire tax amount by themselves. The self-employment tax rate is around 15.3% out of which 12.4% is for social security up to a particular annual income and 2.9% is covered for Medicare with no income limit.
The total income earned by the proprietors and the business owners is called the proprietor's income.
Apart from an exemption, proprietorship ITR Filing must be filed annually. As previously indicated, the owner is regarded as a single person together with the proprietorship businesses. Depending on the type of proprietorship, two forms must be submitted on or before 31 july.
ITR 3 must be provided if the ITR filing for proprietorship firm is conducted by a Hindu Undivided Family or by a single person. ITR 4 is used by the proprietorship firm as part of a presumptive tax arrangement to file proprietorship tax returns. This is being done to lessen the compliance burden on small enterprises.
The proprietorship ITR filing is done through ITR 4 if they choose a presumptive taxation plan.
No, due to the fact that sole proprietorship is not regarded as tax entities and are not distinct from their owners, the proprietor tax return filing is not subject to double taxation.
The ITR for sole proprietors must receive the annual tax returns from proprietorships. However, unlike LLPs, which must file yearly reports and accounts with the MCA, this requirement does not apply to Proprietorship firms.
Sole proprietorship tax return does not require a tax audit because their success is entirely dependent on their revenue and other factors.
Since the sole proprietorship is not subject to separate taxation, all business income and losses must be reported on the ITR for sole proprietor individual's.
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