Proprietorship Compliance

Proprietorship compliance includes Income Tax Return filing under ITR-3 or ITR-4, GST return filing, TDS compliance, and maintenance of books of accounts. We ensure accurate reporting and timely filing to help you avoid penalties and notices.

Ensure complete compliance for your Proprietorship business with expert assistance. We manage income tax filing, GST returns, accounting, and statutory requirements to keep your business compliant and penalty-free.

Income Tax Return Filing (ITR-3 / ITR-4)GST Return Filing & ReconciliationTDS Filing & Compliance SupportBookkeeping & Profit Computation

A sole proprietorship in India is the most basic business setup, where a single individual owns and runs the business.

In India, when it comes to taxes, proprietorships have the same responsibilities as their owners. A proprietorship is an extension of the owner, meaning the tax process is quite similar to what individuals go through. The rules of income tax for sole proprietorship that apply to individual proprietors also apply to proprietorships.

Proprietorships, much like partnerships and companies, are required to pay income tax for sole proprietorships based on their earnings and the applicable sole proprietorship tax rate. For tax purposes, proprietors and their businesses are viewed as single entities. The income tax filing process for proprietorships aligns with the tax returns of the Proprietor. Since a proprietorship isn't considered a distinct legal entity, it has no unique tax identification number. Instead, the Proprietor's Permanent Account Number is used for filing returns on behalf of the proprietorship.

The income tax landscape for proprietorship firms has witnessed significant changes in the 2023-2024 budgets. The revised income tax regime has introduced an enhanced tax rebate threshold of Rs. 3 lakh for both salaried individuals and taxpayers. Moreover, the tax rebates for individual and salaried taxpayers have been elevated from Rs. 5 lakh to Rs. 7 lakh under this updated income tax framework. In the below table, we have outlines income tax slab for proprietorship firm:

Proprietor's Age Net Income Range Rate of Income Tax (%) Below 60 Years Up to Rs. 2,50,000 - Rs. 2,50,001 to Rs. 5,00,000 5 Rs. 5,00,001 to Rs. 10,00,000 20 Above Rs. 10,00,000 30 60-80 Years Up to Rs. 3,00,000 - Rs. 3,00,001 to Rs. 5,00,000 5 Rs. 5,00,001 to Rs. 10,00,000 20 Above Rs. 10,00,000 30 Above 80 Years Up to Rs. 5,00,000 - Rs. 5,00,001 to Rs. 10,00,000 20 Above Rs. 10,00,000 30

In addition to the Income Tax amount calculated, individuals must pay Surcharge and Cess based on the above-mentioned tax slabs.

In respect of a Proprietor, the rate of surcharge for the Assessment Year 2024-25 is tabulated here:

Nature of Income Range of Total Income Up to Rs. 50 lakhs (%) Rs. 50 lakhs to Rs. 1 crore (%) Rs. 1 crore to Rs. 2 crores (%) Rs. 2 crores to Rs. 5 crores ((%) More than Rs. 5 crores Short-term capital gain as per under Section 111A or Section 115AD Nil 10 15 15 15 Long-term capital gain is covered under Section 112A or Section 115AD, or Section 112 Nil 10 15 15 15 Dividend income not being dividend income chargeable to tax at the special rate under sections 115A, section 115AB, section 115AC, section 115ACA Nil 10 15 15 15 Unexplained income chargeable to tax under Section 115BBE 25 25 25 25 25 Any other income Nil 10 15 25 37

If you're a sole proprietor looking to file an Income Tax Return (ITR) for your Proprietorship Firm, make sure you have the following essential documents ready:

PAN Card Bank Account Details Aadhar Card Advance Tax Payment Challan Form 16, 16A, and 26AS

These documents must be kept for the payment and filing of income tax for sole proprietorship.

When it comes to filing ITR for proprietorships, it's important to note that these businesses are typically required to file annually unless exempted. The income tax of a proprietorship is treated as the owner's personal income.

Depending on the nature of your proprietorship, you will use one of two forms:

TDS returns are mandatory for proprietors with a valid TAN. The type of TDS return to be filed depends on the purpose of deduction, including Form 24Q for TDS on Salary, Form 27Q for TDS involving non-resident foreign companies, Form 26QB for TDS on property transfers, and Form 26Q for TDS in other cases.

Proprietors must register their sole proprietorship for GST if their business turnover exceeds Rs. 20 lakhs. Under GST, they must file GSTR-1 and GSTR-3B returns, which detail outward and inward supplies of taxable goods and services, along with tax payments. The chosen GST scheme determines the frequency of filing.

EPF (Employees' Provident Fund) registration is required for proprietors employing more than 20 individuals. This mandates the filing of EPF returns.

Sole proprietors must maintain proper books of accounts if their sales/turnover/gross receipts exceed Rs. 25,00,000 or if their business income exceeds Rs. 2,50,000 in any of the preceding three years.

The audit of a proprietorship depends on its annual turnover and specific circumstances. Here are three scenarios that require an audit:

Turnover Exceeds Rs 5 Crore: If a proprietorship's annual turnover crosses Rs.5 crore during the assessment year, it must be audited. This rule applies to businesses involved in trade or commerce. Professional Proprietorship with Receipts Over Rs 50 Lakh: An audit is necessary for professional proprietorships like consultancies or service-based businesses if their total receipts go beyond Rs 50 lakh. Proprietorship under Presumptive Tax Scheme: Regardless of the annual turnover, it requires an audit if a proprietorship falls under any presumptive tax scheme.

The regulations for auditing a proprietorship are outlined in the Income Tax Act of 1961, stating that a certified Chartered Accountant (CA) must conduct the audit. This audit ensures that the financial information of the proprietorship is accurate and complies with the law.

bkauditors.com is your reliable partner in fulfilling the compliance needs of your Sole Proprietorship. We simplifies the filing of Income Tax Returns, ensuring you meet the deadlines and adhere to tax regulations.

We also support TDS Return filing, helping you accurately report deductions. For businesses registered under GST, our services include hassle-free GST Return filing, covering both GSTR-1 and GSTR-3B.

bkauditors.com can assist in EPF Return filing, ensuring Compliance with employee provident fund regulations. With bkauditors.com, you can focus on growing your Sole Proprietorship while we care for your compliance needs, ensuring your business's financial health and legal standing.

Ready to file your Proprietorship Income Tax Return with ease? Get started now!