fbpx

Sole Proprietorship Tax filing

  • Hassle - free tax-filing services

  • All Document Sharing Online

  • Coordinate with a real human

  • Save time, effort & money

  • Wealth of experience

  • Your data is safe with us

Schedule a call

Packages

How It Works

  1. Schedule a Call at time that works for you
  2. Speak with our consultant and share your documents
  3. Your ITR Filing is done in 3 easy steps!

What is Sole Proprietorship Return Filing?

If an individual or HUF (Hindu Undivided Family) is earning income through a business or a profession as a sole proprietorship, they need to file returns as one legal entitiy. Essentially, in legal terms, the proprietor ans the proprietorship business are one in the same entity.

Eligibility

Since the proprietorship and proprietor are treated as one, the laws that apply for eligibility for individual income tax also apply to sole proprietorships. In essence:

  • Sole Proprietors above the age of 60 are exempt from paying income tax if their total income is less than Rs. 3 lakhs in a financial year.
  • Sole Proprietors aged 80 years and above are exempt from paying income tax if their income in a particular financial year is Rs. 5 lakhs and below.

Moreover, the eligibility to carry forward losses is also dependent on filing returns on or before the due date to file such returns. Further, deductions, such as those under Section 10A, 10B, 80-IA, 80-IB, 80-IC are disallowed if returns have been filed after the due date.

Which ITR is applicable to Sole Proprietors?

Broadly, Sole Proprietorships can either file an ITR 3 or an ITR 4.

ITR 4 Sugam, under the presumptive taxation scheme, can be used by Sole Proprietorships that are earning less than Rs. 2 crores a year through business or Rs. 50 lakhs per year through porfession. This option exists to reduce the compliance burden of small business as no Profit and Loss Statement or Balance Sheet needs to be furnished in the returns.

As as ITR 3 is concercened, this form should be used to file income tax if the proprietorship is run by a Hindu Undivided family or any other proprietor.

Applicable Slab Rates

For sole proprietorships, subject to certain conditions the individual slab rates apply, which are as follows:

Net Income in a Financial Year Tax rate
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%
15,00,001 and Above 30%

When a Sole Proprietor is aged between 60 years and 80 years the following slabs apply:

Net Income in a Financial Year Tax rate
Upto Rs. 3,00,000 Nil
3,00,001 - 5,00,000 5% on net income above 3,00,000
5,00,001 - 10,00,000 Rs. 10,000 + 20% of net income above Rs. 5,00,000
10,00,001 and Above Rs. 1,10,000 + 30% of net income above Rs. 10,00,000

If a Sole Proprieotr is aged above 80 years, the following slab rates will apply:

Net Income in a Financial Year Tax rate
Upto Rs. 5,00,000 Nil
Rs. 5,00,001 - Rs. 10,00,000 20% of net income above Rs. 5,00,000
Rs. 10,00,001 and Above Rs. 1,00,000 + 30% of net income above Rs. 10,00,000

Further a surcharge applies when net incomes are very high, such as:

Net Income in a Financial Year Tax rate
Rs. 50,00,000 - Rs. 1,00,00,000 10% on income tax
Rs. 1,00,00,001 - Rs. 2,00,00,000 15% on income tax
Rs. 2,00,00,001 - Rs. 5,00,00,000 25% on income tax
Rs. 5,00,00,001 and above 37% on income tax

Audit Requirements for a Sole Proprietorship

Under certain circumstances, sole proprietorships need to get their returns audited by a certified Chartered Accountant. These are as follows:

  1. If the total turnover of the Sole Proprietorships, earning income from business, exceeds Rs. 1 crore in any financial year.
  2. If the total turnover of the Sole Proprietorships, earning income from a profession, exceeds, Rs. 50 lakhs in a any financial year.
  3. If a proprietorship is under any presumptive tax scheme, regardless of the annual turnover, an audit is required.

Due Dates

Type of Business Deadline
Proprietorships that don’t require an Audit 31st July
Proprietorships that require an Audit 30th September
Proprietorships that have undertaken certain foreign transactions or dealt with certain specified domestic entities 30th November

Documents Required

Type (As Applicable) Documents Required
Business Income
  1. Profit and Loss Statement
  2. Balance Sheet
  3. Previous Year’s Balance Sheet
  4. Fixed Asset Ledger
Salary Income
  1. Form 16
  2. Salary Slips
Rental Income
  1. Rent Receipts
  2. Property tax receipts
  3. Loan statement of Property
Capital Gains
  1. Purchase Detail documents
  2. Sales details documents
  3. New Investment detail documents
  4. Renovation expense documents
Income from Other Sources
  1. Bank statements
  2. Fixed deposit receipt details
General Documents
  1. PAN Details
  2. Aadhar Details

FAQs

  1. Do Sole Proprietorships need pay advance tax?
  2. Are there any other annual compliances for a sole proprietorship?

Contact Us

What is Sole Proprietorship Return Filing?

If an individual or HUF (Hindu Undivided Family) is earning income through a business or a profession as a sole proprietorship, they need to file returns as one legal entitiy. Essentially, in legal terms, the proprietor ans the proprietorship business are one in the same entity.

Eligibility

Since the proprietorship and proprietor are treated as one, the laws that apply for eligibility for individual income tax also apply to sole proprietorships. In essence:

  • Sole Proprietors above the age of 60 are exempt from paying income tax if their total income is less than Rs. 3 lakhs in a financial year.
  • Sole Proprietors aged 80 years and above are exempt from paying income tax if their income in a particular financial year is Rs. 5 lakhs and below.

Moreover, the eligibility to carry forward losses is also dependent on filing returns on or before the due date to file such returns. Further, deductions, such as those under Section 10A, 10B, 80-IA, 80-IB, 80-IC are disallowed if returns have been filed after the due date.

Which ITR is applicable to Sole Proprietors?

Broadly, Sole Proprietorships can either file an ITR 3 or an ITR 4.

ITR 4 Sugam, under the presumptive taxation scheme, can be used by Sole Proprietorships that are earning less than Rs. 2 crores a year through business or Rs. 50 lakhs per year through porfession. This option exists to reduce the compliance burden of small business as no Profit and Loss Statement or Balance Sheet needs to be furnished in the returns.

As as ITR 3 is concercened, this form should be used to file income tax if the proprietorship is run by a Hindu Undivided family or any other proprietor.

Applicable Slab Rates

For sole proprietorships, subject to certain conditions the individual slab rates apply, which are as follows:

Net Income in a Financial Year Tax rate
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%
15,00,001 and Above 30%

When a Sole Proprietor is aged between 60 years and 80 years the following slabs apply:

Net Income in a Financial Year Tax rate
Upto Rs. 3,00,000 Nil
3,00,001 - 5,00,000 5% on net income above 3,00,000
5,00,001 - 10,00,000 Rs. 10,000 + 20% of net income above Rs. 5,00,000
10,00,001 and Above Rs. 1,10,000 + 30% of net income above Rs. 10,00,000

If a Sole Proprieotr is aged above 80 years, the following slab rates will apply:

Net Income in a Financial Year Tax rate
Upto Rs. 5,00,000 Nil
Rs. 5,00,001 - Rs. 10,00,000 20% of net income above Rs. 5,00,000
Rs. 10,00,001 and Above Rs. 1,00,000 + 30% of net income above Rs. 10,00,000

Further a surcharge applies when net incomes are very high, such as:

Net Income in a Financial Year Tax rate
Rs. 50,00,000 - Rs. 1,00,00,000 10% on income tax
Rs. 1,00,00,001 - Rs. 2,00,00,000 15% on income tax
Rs. 2,00,00,001 - Rs. 5,00,00,000 25% on income tax
Rs. 5,00,00,001 and above 37% on income tax

Audit Requirements for a Sole Proprietorship

Under certain circumstances, sole proprietorships need to get their returns audited by a certified Chartered Accountant. These are as follows:

  1. If the total turnover of the Sole Proprietorships, earning income from business, exceeds Rs. 1 crore in any financial year.
  2. If the total turnover of the Sole Proprietorships, earning income from a profession, exceeds, Rs. 50 lakhs in a any financial year.
  3. If a proprietorship is under any presumptive tax scheme, regardless of the annual turnover, an audit is required.

Due Dates

Type of Business Deadline
Proprietorships that don’t require an Audit 31st July
Proprietorships that require an Audit 30th September
Proprietorships that have undertaken certain foreign transactions or dealt with certain specified domestic entities 30th November

Documents Required

Type (As Applicable) Documents Required
Business Income
  1. Profit and Loss Statement
  2. Balance Sheet
  3. Previous Year’s Balance Sheet
  4. Fixed Asset Ledger
Salary Income
  1. Form 16
  2. Salary Slips
Rental Income
  1. Rent Receipts
  2. Property tax receipts
  3. Loan statement of Property
Capital Gains
  1. Purchase Detail documents
  2. Sales details documents
  3. New Investment detail documents
  4. Renovation expense documents
Income from Other Sources
  1. Bank statements
  2. Fixed deposit receipt details
General Documents
  1. PAN Details
  2. Aadhar Details

FAQs

  1. Do Sole Proprietorships need pay advance tax?
  2. Are there any other annual compliances for a sole proprietorship?