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Income Tax Return of Sole Proprietorship Online

Sole Proprietorship is the most known business framework in India as it is quite simple to start and requires minimum legal formalities. The proprietors exercising business activities in India are required to file tax return annually according to their slab rates, depending on their annual income as prescribed in the Income Tax Act

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How to file Income Tax Return for Proprietorship Online ?
A Step by step guide that will help you e-file income tax return by Call CA Income Tax Team
Step 1 Concept Understanding

Our team helps you to gather all the required data for ITR Filings and helps you to maintain an easy system for ITR Filings

Step 2 Submission of Requisite Documents

Our team of professionals prepare the necessary data and guides you for ITR status and upload the ITR Return with Aadhar Verification.

Step 3 Filing of Return and Reporting

Our Income tax team will file the return and share you the acknowledgement. We also provide the Computation report that enables you for better and transparent understanding of your ITR

What is Income Tax Return for Sole Proprietorship Firm ?

Filing business tax returns is essentially the process by which a business has to report its income and expenditure to the Income Tax department. All businesses that are operating in India, whether small or big have to file Income Tax returns every year. The tax return for companies is more complicated than individual taxpayers.

A business tax return is nothing but a statement of income earned and expenditure of the business. If the business posts some profits, tax needs to be paid on the profits. Apart from filing taxes, a business may also be required to file TDS or pay advance tax as the need be. Tax returns filed by a business also will have details on assets and liabilities a business has. In this article, we will take a look at how to file business income tax returns and also specifically at filing small business tax returns.

Requirements & Facts

Proprietorships operating in India are required to file income tax return each year. Since proprietorships are considered to be one and same as the proprietor, the income tax return filing procedure for a proprietorship is similar to individual income tax return filing.

If as a business, you meet any of the following criteria, then maintaining the books of accounts is mandatory.
  • Income is more the Rs. 1,20,000
  • Total sales, turnover or gross receipts are more than Rs. 10,00,000,
  • If you do not exceed the above-given limit then you are not required to maintain books of account under section 44AA

If as a business, you meet any of the following criteria, then Tax Audit as per Income Tax Act is mandatory.
  • Proprietorship firm with total sales exceeding over INR 1 Crore in a financial year
  • Professionals (CA, Lawyers. Doctors) with gross receipts exceeding over INR 50 Lacs in a financial year
  • Other proprietorship firm under any presumptive taxation scheme, irrespective of its turnover, where-in the claimed income is lesser than the estimated earnings or gains specified under the scheme
Businesses need to use Sugam ITR-4 for Income Tax return if they have opted for the presumptive income scheme as per section 44AD and Section 44AE of the Income Tax Act. Any business that has a turnover of less than Rs 2 crore can opt to be taxed presumptively by the Income Tax Department. Such businesses must declare profits of 8 percent for non-digital transactions or 6 percent for digital transactions, whichever one applies to their case.

When adopting a presumptive taxation scheme businesses can declare income at a prescribed rate and, in turn, does not need to do the tedious job of maintaining accounts. However, only a resident partnership firm (not limited liability partnership firm) can adopt the presumptive taxation scheme.

Tax Audit

The Income Tax Department has made provisions for tax audit under Section 44AB of the Income Tax Act 1961. The purpose of an income tax audit is that an individual or organisation’s taxes are examined by an external agency to check that all the information regarding income, expenditure and deduction has been filed correctly. Income Tax Audit has been made mandatory, and all taxpayers have to get the accounts of their business or organisation audited as per as the provisions of Section 44AB of the Income Tax Act.

An Income Tax audit has several objectives. It ensures that all businesses maintain a proper book of accounts and other expense and revenue records in a proper manner. A tax audit also ensures that the total income and claims for deduction are correctly entered when filing the returns. This brings down chances of fraud.

Income tax audit applies to certain classes of businesses. If a proprietor is running a business and sales turnover exceeds Rs 1 crore, a tax audit is mandatory. LLPs with an annual turnover of more than Rs 40 lakh or capital contribution of Rs 15 lakh needs to audit their accounts by a chartered accountant. All kinds of companies, whether it is a private limited company or one person company need to get tax audits done irrespective of annual turnover.

Docs required of Filing of Income Tax Return of Sole Proprietorship

The Following documents and information for Filing of income Tax Return :
  • PAN (Permanent Account Number ) of the Proprietor. This is a card that is issued by the Income Tax Department to every taxpayer. It provides the owner of the card a unique Permanent Account Number (PAN) which is needed to pay taxes.
  • Bank Statements with Narrations of transactions
  • Details of Sale and Purchases with GST Returns (if applicable)
  • Our Income Tax Team form Call CA will connect with you for finalizing the accounts and drafting the Income Tax Form
  • After filling out all the relevant information, you have to choose the verification method. There are three methods, tow for e-filing and one for physical filing-
        – Select e-verify, which will verify the filing right away
        – E-verify later within 120 days, which gives you time to update any information required within 120 days
        – Select ‘I don’t want to e-verify’ to continue manually
  • After submission in the e-verify option, you can verify the filing either via OTP or EVC. The OTP/EVC must be entered within 60 seconds for successful verification.

Why Call CA ?

We get your Income tax return  done with complete online support. You need not to step outside your home and we guide you to enter into the business world hasselfree. At Call CA , our team helps you to understand the concept of ITR filing and help you to arrange the right documention done for the ITR Filings . Call CA has a TAT for ITR  is 3 working days 

FAQs

What is an Tax Audit ?

​​​​​The dictionary meaning of the term "audit" is check, review, inspection, etc. There are various types of audits prescribed under different laws like company law requires a company audit, cost accounting law requires a cost audit, etc. The Income-tax Law requires the taxpayer to get the audit of the accounts of his business/profession from the view point of Income-tax Law. Section 44AB gives the provisions relating to the class of taxpayers who are required to get their accounts audited from a chartered accountant. The audit under section 44AB aims to ascertain the compliance of various provisions of the Income-tax Law and the fulfillment of other requirements of the Income-tax Law. The audit conducted by the chartered accountant of the accounts of the taxpayer in pursuance of the requirement of section 44AB​ is called tax audit. The chartered accountant conducting the tax audit is required to give his findings, observation, etc., in the form of audit report. The report of tax audit is to be given by the chartered accountant in Form Nos. 3CA/3CB and ​ 3CD. ​

What businesses are commonly run as sole proprietorships?

Most local businesses are run as sole proprietorships, from your grocery store to a fast food vendor, and even small traders and manufacturers. This is not to say that larger businesses do not operate as sole proprietors. Even some jewellery shops are sole proprietors, but this is not recommended.

Why is sole proprietorship registrations best suited only for the unorganised and small business?

A sole proprietorship is a kind of unregistered business entity that is owned, managed and controlled by one single person. Sole proprietorship’s are used by most micro and small businesses operating in the unorganised sectors. Proprietorships are very easy to start, however, after the start-up phase, the proprietorship’s doesn’t offer the promoter a host of benefits like the limited liability proprietorship, corporate status, a separate legal entity, an independent existence, transferability, perpetual existence – which are the desirable features for any business. Hence, a proprietorship registration is suited only for the unorganised, small businesses that remain small and/or have a limited period of existence.

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