Income Tax Return Filing Proprietorship Firm
Sole Proprietorship is most popular kind of business format in India. Its manager and owned by single person who is responsible for profit & losses. The status of sole Proprietorship in income tax is as individual. Income tax return filing is applicable for Proprietorship if age of individual is below 60 and income is above 2.5 Lac. In case Proprietorship age is above 60 and below 80 and income is above 3 lac income tax filing is applicable. For saving income tax individual can make varies kind of investments in 80 C applicable products.
A N Bhutada & CO Provide Sole Proprietorship Tax Return Filing, tax planning & auditing services. Proprietorship business is easy to registration and have less compliances as compared to Private Limited or LLP. Under self-assessment Proprietorship individual need to make income tax calculation , pay income tax & file income tax return. In case where turnover crossed Rs. 1 Crore / Rs. 50 lac tax audit is applicable.
- ITR Filing Due date 31 July 2020
- ITR Form 3 & 4 Applicable
- Non Filing Penalty upto Rs.10000
- Online Filing Applicable
- Income Tax Rate
- Audit Applicable if turnover > Rs. 100 / Rs. 50 Lac
Income Tax Rate For Proprietorship
For income tax purpose individual & Proprietorship business is same. Income tax rate of individual is applicable for Proprietorship business. Income tax rate is applicable as per lab wise and as per age factor. For taxable income above 10 Lac Income Tax Rate For Proprietorship is 30%. Apart from income tax surcharge of 15% applicable if total income is above Rs. 1 Crore. Health and education cess has to be calculated on the sum total of income tax and surcharge. Health and education cess is payable @4% on income tax plus a surcharge. To reduce the tax rate Burdon under section 87A rebate is given.
| S.No | Income Tax | Tax Rate | Financial Year |
|---|---|---|---|
| 1. | Up to ₹2,50,000 | NIL | FY 2019-20 |
| 2. | ₹2,50,001 to ₹5,00,000 | 5% | FY 2019-20 |
| 3. | ₹5,00,001 to ₹10,00,000 | 20% | FY 2019-20 |
| 4. | Above ₹10,00,000 | 30% | FY 2019-20 |
Procedure to Filing Proprietorship Income Tax Return
Income tax filing is process where sole Proprietor reports his annual income & expenditure details and calculate income tax payable. Procedure to Filing Income Tax Return is online one can download income tax return form ITR-3 or Form ITR-4-Sugam from income tax site. ITR 3 is applicable for proprietor or a Hindu Undivided Family who is carrying out a proprietary business or profession.
- Create User ID at income tax Site
- Download latest income tax Form for Proprietor
- Fill firm detail of PAN , Name , Address , Year etc.
- Fill details of Income & expenditure of firm
- Fill details of Interest & remuneration paid to partners
- Fill details of income form various heads of income
- Pay Income Tax as applicable & fill challan
- Upload income tax return on site & Validate ITR
Income Tax Calculation for Partnership Firm
Sole proprietorship business is owned by single individual. On net profit / taxable income of firm income tax is get calculated. Taxable income of sole proprietor is combination of income from salary , income from profession , income from business , income from capital gain , income from other sources. Individual need to maintain books of accounts of firm for income tax calculation. From gross receipts / sales expense of firm get deducted to arrive at net profit. From net taxable income allowable investment , medical premium get deducted then you get net taxable income. .
Income Tax Filing Due Date Proprietorship
Income Tax Filing Due Date Proprietorship is same as for individual for FY 2019-20 ( AY 2020-21) that is 31 July 2020. Where in case for Proprietorship tax audit under income tax section 44 AB is applicable then due date is 30 September 2020. Due date for making investments in section 80C For FY 2019-20 is extended to 30 June 2020. Income tax return filing within due date helps to avoid late filing fees of Rs. 10000/- , helps to carry forward losses of business if any , easy bank loan etc.
Penalty For Non Filing of Income Tax Return
Section 234 F of Income Tax is applicable for penalty for non filing of Income tax return of proprietorship firm. For income tax filing after due date penalty upto Rs. 10000 is applicable. To avoid late filing fees one should file income tax return on or before 31 July 2020.
Reason to File Proprietorship Income Tax Return
Income Tax act make is mandatory income tax return filing for sole Proprietorship business If age is below 60 years and income is above Rs. 2.5 lac. There are various reason to file proprietorship income tax return. Income tax filing is annual activity which is social and moral responsibility of individual. Even in case income is below applicable limit one can file return. Income tax return filing helps to avoid late filing penalty of Rs. 10000/-. Incase business have losses timely filing of return is required to carry forward of business loss. In case of bank loan for personal or housing reason , banker ask for income tax return of past 3 years.
1. Mandatory by Income Tax Act 1961
2. Save Late filing fees of upto Rs.10000
3. Later can revise return
4. Helps in business Loan
5. Helps in Personal/home loan
6. Carry forward of business loss
Income Tax Saving Tips for Proprietorship
Income tax at 30% is applicable for Proprietorship business if income crosses 10 Lac. Hence it become important to plan for legal tax saving. As owner and business are treated same in this case. In form of maintaining proper books of accounts , make investments in government tax saving bond, elss fund etc. helps for tax saving of individual.
1. Maintain correct books of accounts
2. Claim depreciation of fixed assets
3. Make investment in Life Insurance Premium
4. Investments in PPF
5. Pay medical insurance premium
6. Pay advance tax
