File Your ProprietorshipIncome Tax Return
A proprietorship firm files its income tax return in the same manner as the proprietor because the business income is reported through the proprietor's tax return.
Proprietorship businesses operating in India must submit an income tax return annually. Depending on turnover, gross receipts, presumptive taxation, and the income declared, a tax audit may also be required.
Annual Filing
Proprietorship businesses operating in India are required to review and file their income tax return every year.
ITR-3
Form ITR-3 may be used by an individual or Hindu Undivided Family carrying on a proprietary business or profession.
ITR-4 Sugam
Form ITR-4 Sugam may be used by eligible proprietors opting for the presumptive taxation scheme.
Tax Audit Review
Audit applicability depends on turnover, gross receipts, the taxation scheme adopted, and the income declared.
Tax Filing Support
Bank reconciliation, financial statements, audit review, and return filing assistance.
Report Business Income Through theProprietor's Return
A proprietorship firm does not file a separate income tax return from its proprietor because the income, expenses, profits, and applicable tax are reported in the proprietor's return.
The supplied content states that an audit is necessary where business turnover exceeds ₹1 crore. For professionals, it states that an audit is required where gross receipts exceed ₹50 lakhs during the financial year under review.
Presumptive Taxation and Audit
Regardless of turnover, an audit may be necessary where a sole proprietor uses the presumptive taxation scheme but declares income below the profits and gains presumed under the scheme, subject to the applicable provisions.
Form ITR-3 andForm ITR-4 Sugam
The applicable return form depends on the proprietor's business or professional income and whether the presumptive taxation scheme is used.
Form ITR-3
Form ITR-3 may be filed by an individual or Hindu Undivided Family carrying on a proprietary business or profession.
Form ITR-4 Sugam
An eligible proprietor may file Form ITR-4 Sugam when income is offered under the presumptive taxation scheme.
Simplified Taxation forEligible Small Businesses
Under the presumptive taxation model, an eligible fixed profit margin is assumed on the business or professional income. This can reduce the compliance burden for qualifying small firms and professionals.
Important ProprietorshipTax Compliance Points
Audit and filing requirements are reviewed using turnover, gross receipts, presumptive income, banking records, and financial statements.
Business Turnover
The supplied content states that a tax audit becomes necessary where the proprietorship business turnover exceeds ₹1 crore during the financial year.
Professional Gross Receipts
For professionals, the supplied content states that an audit is required where total gross receipts exceed ₹50 lakhs during the relevant financial year.
Presumptive Taxation
An audit may also be required under the presumptive taxation scheme when the proprietor declares income below the prescribed presumptive profits and gains.
Annual Compliance
Proprietorship businesses operating in India must submit an income tax return annually, subject to the applicable filing provisions.
Bank Reconciliation
Business bank transactions are reconciled with the books of account before the financial statements and income tax return are prepared.
Financial Statements
Profit and loss information, balance sheet figures, capital details, and related records are prepared for tax return filing.
From Bank Reconciliation toIncome Tax Filing
The filing process covers financial-document collection, bank reconciliation, statement preparation, audit review, form selection, and final return submission.
Collect Financial Records
Gather bank statements, sales records, purchase details, expense documents, tax records, and business information for the financial year.
Reconcile Bank Statements
Match bank transactions with the books and identify missing entries, personal transactions, business expenses, and reconciliation differences.
Prepare Financial Statements
Prepare the profit and loss statement, balance sheet, capital account, and supporting schedules required for return filing.
Review Audit Applicability
Check whether tax audit provisions apply based on turnover, gross receipts, presumptive taxation, and declared income.
Select the Applicable ITR
Choose between ITR-3 and ITR-4 Sugam according to the proprietor's business, professional activity, and taxation method.
File the Income Tax Return
Review the final tax computation and submit the applicable proprietorship income tax return for the assessment year.
Choose a Plan Based onBusiness Turnover
Each package includes bank statement reconciliation and financial statement preparation, with pricing based on the proprietorship turnover range.
Basic
₹ 15,000
all inclusive fees
Turnover less than ₹50 lakhs
- ✓Bank Statement Reconciliation
- ✓Financial Statement Preparation
Eco
₹ 20,000
all inclusive fees
Turnover less than ₹2 crores
- ✓Bank Statement Reconciliation
- ✓Financial Statement Preparation
Pro
₹ 30,000
all inclusive fees
Turnover more than ₹2 crores
- ✓Bank Statement Reconciliation
- ✓Financial Statement Preparation
- ✓A proprietorship firm files its income tax return through the proprietor because the business and proprietor are not treated as separate taxpayers for income tax purposes.
- ✓The supplied content refers to ITR-3 and ITR-4 Sugam for Assessment Year 2019-20 in relation to earlier financial-year income.
- ✓The presumptive taxation scheme assumes a prescribed profit percentage on eligible business or professional income and can reduce the compliance burden for small taxpayers.
- ✓Current audit thresholds, return-form eligibility, and presumptive taxation provisions should be checked for the relevant financial and assessment year.
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