ITR Filing for Sole Proprietorship Firm
GTS offers comprehensive support for ITR filing for sole proprietorship firms, handling everything from data collection to the final filing of your tax return.
● Provide details: Share your business income, expenses, and relevant documents.
● Tax Calculation & Filing: Our experts will calculate your tax liability and file the return on your behalf.
● Final Submission: We submit the return to the Income Tax Department and ensure you comply with all regulations.
- ITR Filing for Sole Proprietorship Firm - An Overview
Filing an Income Tax Return (ITR) for a sole proprietorship firm involves reporting your business’s income, expenses, and profits to the Income Tax Department. As a sole proprietor, you and your business are considered a single entity for tax purposes, meaning personal and business incomes are treated as one.
● Benefits of Filing ITR for a Sole Proprietorship:
● Compliance with Tax Laws: Ensure that your business adheres to income tax laws and regulations.
● Maximize Deductions: Professional filing helps you claim all possible tax deductions and exemptions.
● Avoid Penalties: Timely filing avoids penalties and interest on late submissions.
● Audit Protection: Proper filing and documentation reduce the risk of tax audits.
- Documents Required for Sole Proprietorship ITR Filing
● PAN Card – For tax identification.
● Aadhar Card – For e-filing verification.
● Bank Account Details – For refunds or payments.
● Form 16, 16A, and 26AS – To verify TDS deductions.
● Advance Tax Payment Challan – For any advance tax paid.
● Profit and Loss Statement – To calculate business income.
● Balance Sheet – For business assets and liabilities.
● GST Returns – If applicable.
● Receipts for Tax-Deductible Expenses – For deductions under sections like 80C, 80D, etc.
● Other Income Documents – For any additional income sources.
Having these documents ready ensures accurate and smooth ITR filing.
- Old Income Tax Regime Slabs for Proprietorship Business/Professionals (Below 60 Years)
● Income up to ₹2,50,000 – Nil (No Tax)
● ₹2,50,001 to ₹5,00,000 – 5% of income exceeding ₹2,50,000
● ₹5,00,001 to ₹7,50,000 – 20% of income exceeding ₹5,00,000
● ₹7,50,001 to ₹10,00,000 – 30% of income exceeding ₹7,50,000
These are the income tax rates applicable under the old tax regime for individual taxpayers below 60 years of age, including sole proprietors.
- Old Income Tax Regime Slabs for Senior Citizens (Aged 60 Years or Above) - Sole Proprietors or Professionals
● Income up to ₹5,00,000 – Nil (No Tax)
● ₹5,00,001 to ₹10,00,000 – 20% of income exceeding ₹5,00,000
● ₹10,00,001 and above – 30% of income exceeding ₹10,00,000
Senior citizens enjoy a higher tax exemption limit (₹5,00,000) under the old tax regime, and the applicable tax rates are as above.
- Income Tax Slabs Under the New Income Tax Regime (FY 2024-25)
● Income up to ₹2,50,000 – Nil (No Tax)
● ₹2,50,001 to ₹5,00,000 – 5%
● ₹5,00,001 to ₹7,50,000 – 10%
● ₹7,50,001 to ₹10,00,000 – 15%
● ₹10,00,001 to ₹12,50,000 – 20%
● ₹12,50,001 to ₹15,00,000 – 25%
● Above ₹15,00,000 – 30%
Under the new tax regime, there are no exemptions or deductions allowed, but the tax slabs are more granular. This regime is aimed at simplifying the tax calculation process.
- Income Tax Slab for Domestic Companies for FY 2022-23
● For Companies with Turnover or Gross Receipts up to ₹400 Crores in FY 2022-23:Tax Rate: 25%
● For Companies Covered Under Section 115BA (New manufacturing companies opting for a lower tax rate):Tax Rate: 25%
● For Companies Covered Under Section 115BAA (companies opting for a reduced tax rate without availing deductions):Tax Rate: 22%
● For Companies Covered Under Section 115BAB (New manufacturing companies with specific conditions):Tax Rate: 15%
● For All Other Domestic Companies:Tax Rate: 30%
Surcharge and Cess:
● Surcharge (on total income):
● If the total income is ₹1 crore to ₹10 crore: 7% surcharge
● If the total income exceeds ₹10 crore: 12% surcharge
● Cess: Health and Education Cess is charged at 4% on the total tax liability (including surcharge).
- Audit of Sole Proprietorship: When is it Required?
An audit for a sole proprietorship is required in the following situations based on the annual turnover or income of the business:
● Turnover Exceeding ₹1 Crore: An audit is mandatory if the proprietorship firm’s total turnover or gross receipts exceed ₹1 crore during the assessment year.
● Professional Income Exceeding ₹50 Lakh:
For professional proprietors (such as doctors, lawyers, consultants, etc.), if the annual receipts exceed ₹50 lakh, an audit must be conducted.
● Presumptive Tax Scheme:
Regardless of turnover, if the proprietorship opts for any presumptive taxation scheme (e.g., under Section 44AD, 44ADA, or 44AE), an audit is mandatory even if the income is below the prescribed turnover limits.
- Steps for e-Filing ITR for Sole Proprietorship Firm
● Contact Tax Experts:
Contact our tax experts to clarify any queries about ITR filing.
● Provide Required Documents:
Share all relevant financial documents with our experts to ensure accurate filing.
● Get Tax Insights:
Our in-house CAs will assess your tax liability and offer advice on ways to reduce it.
● File Your Taxes:
Our team will file your ITR on time, ensuring compliance and helping you avoid penalties.
- How to File an Income Tax Return for Sole Proprietorship
Sole proprietors are required to file income tax returns annually, as their personal and business incomes are considered together for tax purposes. Depending on the type of business, there are two main forms to use:
● Form ITR-3:
If the proprietorship is run by a Hindu Undivided Family (HUF) or another individual, this form is used to file the income tax return.
● Form ITR-4 Sugam:
This form is for proprietorships using the presumptive taxation scheme, which is designed to simplify tax compliance for small businesses.
Since the proprietor’s personal income includes the income from the business, their personal tax rate applies to the total earnings. However, the proprietor is eligible for individual tax benefits, such as exemptions and deductions, as applicable.
GTS can simplify the process for you by helping you file your taxes with ease, ensuring compliance and maximizing your savings.
- Presumptive Income Tax Scheme
● Eligibility: Available for individuals, HUFs, and partnerships (excluding LLPs) with annual turnover < ₹2 crores.
● Tax Rate:
● Businesses: 8% of turnover/receipts.
● Professionals: 50% of receipts.
● No Detailed Accounting: Only gross receipts need to be maintained.
● Deductions:No deductions for expenses or depreciation.
● Advance Tax:No need for quarterly advance tax payments.
● Other Income: Combine income from other sources with presumptive income.
● Continuity: Can be continued for 5 consecutive years if eligibility is met.
- Why Choose GTS for ITR Filing?
● Expertise: Benefit from our team of tax professionals who specialize in sole proprietorship ITR filings, ensuring compliance and accuracy.
● Time-Saving: Focus on your business while we handle all aspects of your ITR filing, from document collection to submission.
● Compliance Assurance: We ensure timely filing, minimizing the risk of penalties or audits.
● Tax Planning: Get personalized tax planning advice to reduce liabilities and maximize savings.
● End-to-End Support: Our services include document preparation, filing, and ongoing customer support, making the entire process seamless for you.
Choose GTS for hassle-free, expert-led ITR filing for your sole proprietorship.
- FAQ
There is no fixed maximum turnover for a sole proprietorship. However:
Income Tax Audit is required if turnover exceeds ₹1 crore for businesses or ₹50 lakh for professionals.
The Pres umptive Taxation Scheme (Section 44AD) applies to businesses with a turnover of up to ₹2 crore. Beyond this, detailed accounting is required.
Advantages of a s ole proprietorship:
Easy to set up with minimal paperwork.
Full control over decisions.
Simplified taxes (file personal return).
Flexibility in operations.
All profits go to the owner.
Sole proprietorship offers advantages over partnerships, including full control over decisions, fewer legal requirements, all profits going to the owner, simpler taxation, and greater flexibility in operations.
A proprietorship firm can be started by any individual without specific eligibility criteria. The key requirement is to obtain the necessary licenses or registrations based on the nature of the business.
There is no specific turnover limit for sole proprietorships in India. However, certain obligations are linked to turnover. For example, if the turnover exceeds ₹20 lakhs, the business must register for Goods and Services Tax (GST). Additionally, if turnover exceeds ₹1 crore, tax audit requirements may apply.
Sole proprietorships can be classified based on the nature of the business activities:
Trading Sole Proprietorship: Involves buying and selling goods or commodities.
Manufacturing Sole Proprietorship: Focuses on producing and selling goods.
Service Sole Proprietorship: Provides services to clients or customers, such as consulting, education, healthcare, etc.
Yes, a PAN is required for a sole proprietorship in India for filing income tax returns, opening a business bank account, and complying with tax regulations.
Yes, you can file your ITR online yourself. The Income Tax Department provides an e-filing portal where you can register, select the appropriate ITR form, and submit your return electronically. You can also use tax software or consult tax experts for assistance.
Get Started with Global Consultants
Submit your details below, and our experts will guide you through the process.
Contact Us for more details and to get started with your process!