ITR FOR BUSINESS & PROFESSION
BASIC PLAN
ITR FOR SOLE PROPRIETORSHIP:
o Income Tax Return for Proprietorship are to be filed every year unless there is an exemption.
o The proprietor and the proprietorship firms are considered as one single person.
o Two forms are to be filed depending on the nature of the proprietorship.
– FORM ITR-3, FORM ITR-4
o Depending upon the annual turnover of the proprietorship, an audit is necessary to be carried.
o Under these three conditions, an audit would be required:
1) If the turnover of the proprietorship firm carrying business is exceeding Rs.1 crore during the financial year.
2) In a professional case, an audit is required if total gross receipts are exceeding Rs—50 lakh.
3) If the proprietorship is under any presumptive tax scheme regardless of the annual turnover, an audit is required.
o The audit is carried on under the rules set by the Income Tax Act, 1961.
o The audit is to be done by a certified Chartered Accountant (CA).
o The CA has to ensure that all the books of accounts are correctly maintained and complied with all the compliances.
Get Free Expert Consultation: Submit Your Details
Affordable Pricing Options: Find the Perfect Plan for Your Needs
FILE FOR ITR-3 FORM :
- Proprietorship (Individual).
- Freelancers and Professionals.
- Partners in Firms.
» Preparation of:
- Balance sheet.
- Profit and Loss statement.
» Income Tax Return Filing.
Rs 2,499/-
ITR FOR BUSINESS & PROFESSION
STANDARD PLAN
FILE FOR ITR-3 FORM :
- Proprietorship (Individual).
- Freelancers and Professionals.
- Partners in Firms.
» Preparation of:
- Balance sheet.
- Profit and Loss statement.
» Income Tax Return Filing.
Rs 4,999/-
ITR FOR BUSINESS & PROFESSION
PREMIUM PLAN
FILE FOR ITR-3 FORM :
- Proprietorship (Individual).
- Freelancers and Professionals.
- Partners in Firms.
» Preparation of:
- Balance sheet.
- Profit and Loss statement.
» Income Tax Return Filing.
Rs 7,499/-
ITR FOR BUSINESS & PROFESSION
BASIC PLAN
FILE ITR-4 FORM FOR:
- ITR-4 Form is the Income Tax Return form for the taxpayers who opt for a presumptive income scheme under Section 44AD, 44ADA, 44AE.
- To enroll for the scheme, the taxpayer must have less than 2 crores of business income or less than Rs 50 lakhs of professional income.
Rs 1,249/-
ITR FOR BUSINESS & PROFESSION
STANDARD PLAN
FILE ITR-4 FORM FOR:
- ITR-4 Form is the Income Tax Return form for the taxpayers who opt for a presumptive income scheme under Section 44AD, 44ADA, 44AE.
- To enroll for the scheme, the taxpayer must have less than 2 crores of business income or less than Rs 50 lakhs of professional income.
Rs 1,499/-
ITR FOR BUSINESS & PROFESSION
PREMIUM PLAN
FILE ITR-4 FORM FOR:
- ITR-4 Form is the Income Tax Return form for the taxpayers who opt for a presumptive income scheme under Section 44AD, 44ADA, 44AE.
- To enroll for the scheme, the taxpayer must have less than 2 crores of business income or less than Rs 50 lakhs of professional income.
Rs 2,499/-
Get Free Expert Consultation: Submit Your Details
ITR FOR SOLE PROPRIETORSHIP
ITR FOR SOLE PROPRIETORSHIP:
ITR for Proprietorship is just like the LLPs and the Companies registered in India.
- In the legal sense, the proprietorship and the proprietor are considered to be one.
- Hence, the income tax return filing of the proprietor and the proprietorship are the same.
- As a sole proprietorship is not taxed as a different legal entity, the business owners file their business taxes like their individual returns.
- Like any other individual taxpayer, a proprietorship firm is also entitled to a proprietorship tax deduction as per the prevailing Income tax rules and depending on the slab rates applicable to his income.
- Whereas the income tax rates for the registered companies are assessed on flat rates.
- As the proprietorship firms are small and independent businesses owned by a single person. These unregistered businesses are one of the easiest to manage.
- MANDATORY COMPLIANCES FOR ITR FOR PROPRIETORSHIP:
- Some of the mandatory compliances that a Proprietorship must meet are –
- A tax audit (required if sales turnover of a firm is over rupees one crore over a financial year, or in cases of professional firms if the total gross receipts are over rupees fifty lakhs).
- Duly filled Forms ITR – 3 & ITR – 4 – Sugam (where applicable in the cases of a Hindu Undivided Family).
HOW TO FILE INCOME TAX FOR PROPRIETOR
- INCOME TAX RETURN FOR PROPRIETOR:
- Income Tax Return for Proprietorship are to be filed every year unless there is an exemption.
- The proprietor and the proprietorship firms are considered as one single person.
- Two forms are to be filed depending on the nature of the proprietorship.
- FORM ITR-3, FORM ITR-4
- This form should be used to file Income tax if the proprietorship firm is run by a Hindu Undivided Family (HUF) or by any proprietor.
- The proprietorship firm uses this form for proprietorship tax filing under a presumptive tax scheme. This is done to reduce the burden of compliance of small businesses.
IS IT NECESSARY TO FILE ITR FOR PROPRIETORSHIP FIRM
- Under the Income Tax Act, all proprietors below the age of 60 are required to file an Income tax return if the total income is more than Rs. 3 Lakhs.
- In the case of proprietors over the age of 60 years but below 80 years are required to file income tax return if the total income exceeds Rs. 3 Lakhs.
- Proprietors over the age of 80 years and above must file the proprietorship tax returns if the income exceeds Rs. 5 lakhs.
- Losses in the business would be allowed to be carried forward, if the proprietor files an income tax return before the deadline. The deduction under sections 10A, 10B, 80-IA, 80-IAB, 80-IB, and 80-IC cannot be permitted unless the proprietorship income tax return has been filed on or before the due date.
INCOME TAX SLAB RATE - BELOW 60 YEARS OF AGE
| INCOME RANGE | RATE OF TAX (FY 2020-21) ONWARDS |
|---|---|
| 0-2,50,000 | NIL |
| 2,50,001-5,00,000 | 5% |
| 5,00,001-7,50,000 | 10% |
| 7,50,001-10,00,000 | 15% |
| 10,00,001-12,50,000 | 20% |
| 12,50,001-15,00,000 | 25% |
| Above 15,00,000 | 30% |
INCOME TAX SLAB RATE - ABOVE 60 YEARS OF AGE
| INCOME RANGE | RATE OF TAX (FY 2020-21) ONWARDS |
|---|---|
| Upto Rs 3,00,000 | NIL |
| 3,00,001-5,00,000 | 5% of the Total Income above Rs 3,00,000. |
| 5,00,001-10,00,000 | Rs 10,000 + 20% of the Total Income above 5,00,000 |
| Above 10,00,000 | Rs 1,10,000 + 30% of the Total Income above Rs 10,00,000 |
INCOME TAX SLAB RATE - ABOVE 80 YEARS OF AGE
| INCOME RANGE | RATE OF TAX (FY 2020-21) ONWARDS |
|---|---|
| Upto Rs 5,00,000 | NIL |
| 5,00,001-10,00,000 | 20% of the Total Income above Rs 5,00,000. |
| Above Rs 10,00,000 | Rs 10,000 + 30% of the Total Income above 10,00,000 |
INCOME TAX SLAB RATE FOR NON-RESIDENT IRRESPECTIVE OF AGE
| INCOME RANGE | RATE OF TAX (FY 2020-21) ONWARDS |
|---|---|
| Upto Rs 2,50,000 | NIL |
| 2,50,000-5,00,000 | 5% of the Total Income above Rs 2,50,000. |
| 5,00,000 to 10,00,000 | Rs 12,500 + 20% of the Total Income above 5,00,000 |
| Above Rs 10,00,000 | Rs 1,12,500 + 30% of the Total Income above Rs 10,00,000 |
SURCHARGE RATES
| INCOME RANGE | RATE OF TAX |
|---|---|
| Total Income above Rs 50 lakh to Rs 1 Crore | 10% of the income tax. |
| Total Income above Rs 1 Crore | 15% of the Income tax. |
PRESUMPTIVE TAXATION SCHEME
- A presumptive taxation scheme is a provision within the Income Tax At that provides relief to the small taxpayers.
- The Government of India aimed at allowing the small businesses to carry on the trade without being burdened by the excessive compliance-related requirements.
- Entities enrolled under the presumptive taxation scheme can compute income on an estimated basis under Section 44AD.
- The presumptive taxation scheme allows the taxpayers to pay tax at a minimum rate.
- Also, the entities enrolled under the scheme need not maintain books of accounts.
- A presumptive taxation scheme is an effective medium that taxpayers can use to reduce the compliance-related burden.
AUDIT OF PROPRIETORSHIP
- Depending upon the annual turnover of the proprietorship, an audit is necessary to be carried.
- Under these three conditions, an audit would be required:
- If the turnover of the proprietorship firm carrying business is exceeding Rs.1 crore during the financial year.
- In a professional case, an audit is required if total gross receipts are exceeding Rs—50 lakh.
- If the proprietorship is under any presumptive tax scheme regardless of the annual turnover, an audit is required.
- The audit is carried on under the rules set by the Income Tax Act, 1961. The audit is to be done by a certified Chartered Accountant. The CA has to ensure that all the books of accounts are correctly maintained and complied with all the compliances.
FREQUENTLY ASKED QUESTION - FAQ.
Is it necessary for the Sole Proprietor to file taxes?
- The sole proprietor and the proprietorship firms are considered as one single person.
- A sole proprietor is required to report all the business income, losses on the personal income tax returns, the business is not taxed separately under this.
How to file income tax returns of a Proprietorship?
Proprietorship annual return filing is done ITR 3 and ITR 4.
When to file ITR 3 for Proprietorship return filing?
ITR 3 is furnished, if the proprietorship firm is run by a Hindu Undivided Family or by an individual.
Is a Proprietorship taxed twice or double?
The sole proprietor and the proprietorship firms are considered as one single person, so the sole proprietor does not have to face double taxation.
What are the major tax benefits for a Sole Proprietor?
The main tax advantage of a proprietorship is that it can deduct the cost of health insurance for self, spouse, and dependents.
What are the annual compliances for a Proprietorship Firm?
- The proprietorships are required to file the annual tax returns with the Income Tax Department.
- However, the annual reports or the accounts are not necessary to be filed with the Ministry of Corporate (MCA) affairs which is necessary in the case of the LLPs.
Is it necessary to get a Proprietorship audited?
- In the case of proprietorships, tax audit is not necessary.
- It is completely based on the turnover and other criteria.
CHOOSE