Proprietorship Tax Return Filling

There is no distinction between the proprietorship and the proprietor. Due to the fact that a sole proprietorship is not taxed as a separate legal entity, the business owners file their tax returns as individuals. File your tax to avoid any legality.

Know your accounts by heart and tax redefined

Trusted by 1,000 clients and counting...

  • In the same way that proprietors are required to pay taxes on their earnings, partnerships and limited liability partnerships (LLPs) are also considered to be incorporated businesses. According to the provisions of the law, a sole proprietorship and its proprietor are treated as a single entity for the purposes of filing income tax returns. As a direct consequence of this fact, the laws that govern the payment of the income tax by the proprietor are also applicable to the proprietorship.

  • On the other hand, the income tax rates that apply to registered companies are predetermined and determined by flat rates. A sole proprietorship, on the other hand, will not be subject to taxation as if it were a separate legal entity. Every owner of a business in the country ought to file their taxes using the individual return format, just like every other taxpayer in the country. According to the regulations governing income tax and the graduated tax rates, the proprietorship tax is also eligible for a deduction.

  • Beginning a business as a sole proprietorship is much simpler and less time-consuming than beginning a business as a formal corporation. It is also significantly less expensive. In some states, it is possible to establish a sole proprietorship without being subject to the stringent requirements for double taxation that apply to most corporations. The name of the proprietor can be used for the proprietorship, but if the owner prefers, they can also use a fictitious name to help market the business.

  • Tax advantages include the fact that the owner of a sole proprietorship is exempt from having to file a separate tax report for the business. Instead, they will include details and figures pertaining to the business within their individual tax return. This may help save money on additional costs associated with accounting and filing taxes. Instead of being subject to the rates that apply to corporate income, the business will be taxed according to the rates that are applied to personal income. You can learn here about the various tax rates that apply to proprietorship firms.

  • Employment is an option for sole proprietorships, which can bring on staff. This has the potential to result in many of the benefits that are associated with the creation of new jobs, such as tax breaks. Additionally, spouses of business owners are eligible for employment despite the fact that they are not required to be formally declared as employees. A sole proprietorship can be started by married couples as well; however, only one person can assume legal responsibility for the business.

  • The owner retains complete control over all aspects of the business’s decision-making process. Additionally, at any time that the owner sees fit, the sole proprietorship can be completely transferred to another party.

  • If a proprietor’s annual income is more than Rs. 2.5 lakhs and they are under the age of 60, the Income Tax Act requires them to file an income tax return regardless of their age. If a proprietor’s annual income is more than Rs. 3 lakhs, then they are required to file income tax returns if they are over the age of 60 but under the age of 80. If the proprietor’s total income is more than Rs.5 lakhs, then they are required by law to file an income tax return. The age requirement starts at 80 years old.

  • In addition, in order for the business to be eligible to carry forward any losses incurred, the proprietor of the company must file their income tax return before the deadline. Additionally, in order to qualify for the deductions provided by Sections 10A and 10B, as well as Sections 80-IA, 80-IAB, 80-IB, and 80-IC, the proprietorship tax return must have been submitted on or before the due date.

  • It is imperative that the proprietor’s income tax, which is the same as the income tax of the proprietorship, is filed each and every year without fail. The filing of the income tax return will require the electronic signature of the proprietor. You will need to submit one of two different forms, and this will depend on the type of proprietorship you have. At the outset, you will be required to hand over to our specialists all of the necessary documentation, which includes your PAN card.

  • If the proprietorship is managed by a Hindu Undivided Family (HUF) or any other owner, you will need to fill out ITR 3 Form.

  • Form ITR 4: ITR This one is the one that sole proprietorships and other businesses that are required to comply with presumptive tax schemes use. By submitting this form, the burden of compliance for small businesses will be reduced, and you will still receive the deductions that are available to HUFs.

  • After that, our knowledgeable staff members will register it in the appropriate official portals. The scenario will determine both the assessment year and the type of ITR filing that is selected. After you have finished all of the steps in the process, the confirmation that is necessary will be given to you.

Start My Registration


Which ITR should a proprietorship file?+

Return ITR-3 – This form must be used to file income tax if the proprietorship business is owned and operated by a Hindu Undivided Family (HUF) or by any proprietor.

What tax advantages does the owner of a sole proprietorship enjoy?+

On Form 1040, the owner of a sole proprietorship or partnership can deduct 20 percent of the business’s profits from his or her total income. Additionally, the tax rate may be lower than if the company was incorporated.

What constitutes proof of proprietorship?+

In case of accepting entity proof for proprietorship entity and entity owned by HUF, utility bills & Service/professional tax certificate/Food License confirming Name of Proprietor can be accepted as valid entity proof for sole proprietorship concerns.

Individual Income Tax Filing


About Us

We’re a technology- driven platform, offering services that cover the legal requirements of startups and established businesses. Some of our services include objectification, government enrollments & forms, account, attestation, and periodic obediences.

Copyright © 2022 Legaladder. All Rights Reserved