Easy Income Tax Return (ITR) Filing For Sole Proprietorships
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Online Income Tax Return Filing for Proprietorship Firm
- Income Tax Return Filing for Proprietorship Firm
- Eligibility for Income Tax Return Filing (ITR return) for Proprietorship Firm
- Old Income Tax Slab for FY 2022 – 2023
- New Income Tax Slab for FY 2023 – 2024
- Proprietorship Tax Return Filing Procedure
- Documents Required For Income Tax Return (ITR) Filing for Proprietorship Firm
- FAQs on Income Tax Return (ITR) Filing For Sole Proprietorships
Income Tax Return Filing for Proprietorship Firm
In India, proprietorship firms are required to file an Income Tax Return (ITR) annually if their annual income exceeds the threshold set by the Income Tax Department. The process of filing ITR for a proprietorship firm involves disclosing the firm’s income, expenses, and taxes paid during the financial year. The ITR for proprietorship firms is known as ITR-4.
To file ITR-4, the proprietor of the firm will need to gather all necessary documents such as the PAN (Permanent Account Number) of the firm, bank statements, GST returns, and other financial documents. The ITR can be filed online through the official e-filing portal of the Income Tax Department.
It is also important to note that proprietorship firms are also required to maintain proper books of accounts, get their accounts audited if required, and file the audited financial statements along with the ITR.
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Eligibility for Income Tax Return Filing (ITR return) for Proprietorship Firm
According to old ITR regime, if the total annual income of a proprietorship firm exceeds ₹3 lakhs, the owner, who is under 60 years old, must file an income tax return. Owners above the age of 60 must also file income tax if their income exceeds the ₹3 lakhs threshold. Proprietors under 80 years old are also required to pay income tax if their total income exceeds ₹3 lakhs. However, if their income exceeds ₹5 lakhs, proprietors above the age of 80 must file proprietorship tax returns. Additionally, certain conditions may allow for deductions through Sections 10A, 10B, 80-IA, 80-IAB, 80-IB, and 80-IC.
The basic exemption limit has been increased to INR 3 lakh from the current limit of INR 2.5 lakh under the new income tax system outlined in the 2023 Budget. Additionally, the income tax brackets have been altered, with 5 income tax slabs being introduced for the financial year 2023-24, instead of the current 6. The rebate under Section 87A has also been increased in the new tax system, from the current income limit of INR 5 lakh to INR 7 lakh. As a result, individuals who choose the new tax system and earn up to INR 7 lakh will not owe any taxes.
Old Income Tax Slab for FY 2022 – 2023
| Income Tax Slab | Tax Rate as Per Old Regime (Applicable for All Individuals & HUF) |
|---|---|
| Up to Rs.2.5 lakh | Nil |
| Above Rs.2.50 – Rs.5 lakh | 5% of the total income that is more than Rs.2.5 lakh |
| Above Rs.5 lakh – Rs.7.50 lakh | 10% of the total income that is more than Rs.5 lakh + Rs.12,500 |
| Above Rs.7.50 lakh – Rs.10 lakh | 15% of the total income that is more than Rs.7.5 lakh + Rs.37,500 |
| Above Rs.10 lakh – Rs.12.50 lakh | 20% of the total income that is more than Rs.10 lakh + Rs.75,000 |
| Above Rs.12.50 – Rs.15 lakh | 25% of the total income that is more than Rs.12.5 lakh + Rs.1,25,000 |
| Above Rs.15 lakh | 30% of the total income that is more than Rs.15 lakh + Rs.1,87,500 |
New Income Tax Slab for FY 2023 – 2024
| Income Tax Slab | Tax Rate as Per New Regime (Applicable for All Individuals & HUF) |
|---|---|
| Up to Rs. 3 lakh | Nil |
| Above Rs. 3 – Rs. 6 lakh | 5% of the total income |
| Above Rs. 6 lakh – Rs. 9 lakh | 10% of the total income |
| Above Rs. 9 lakh – Rs.12 lakh | 15% of the total income |
| Above Rs.12 lakh – Rs.15 lakh | 20% of the total income |
| Above Rs.15 lakh | 30% of the total income |
Proprietorship Tax Return Filing Procedure
As a proprietor, it is your responsibility to file an income tax return every year without fail. You will use your E-signature to file the return. Depending on the type of proprietorship, you will need to submit either the ITR 3 or ITR 4 form. Our experts will guide you through the process and help you gather all necessary documents, including your PAN card.
For proprietorships run by a Hindu undivided family (HUF) or any other owner, you will need to submit the ITR 3 form. If your proprietorship is subject to presumptive tax schemes, you will need to submit the ITR 4 form. This form reduces compliance burden for small businesses and allows for deductions for HUFs. Our experts will then register your forms on the official portals, choose the appropriate assessment year and ITR filing type, and provide you with a confirmation once the process is complete.