Sole Proprietor is popular business model in India. Its easy to do sole Proprietorship registration. Due to is simple structure and slab wise tax benefit its most popular business model. Income Tax rete for Sole Proprietor is higher when firms taxable income is above 15 Lac. Tax planning is required to save income tax for sole proprietor. Income tax return is combination different heads of income. Below are 5 heads of Income Under Income Tax Act 1961.
Under this article we would discuss about Proprietorship Tax Return Filing, Income Tax rate, Due date of filing ITR , audit , list of documents required to file ITR.
|Income Tax Slab||Tax Rate|
|Up to Rs 2.5 lakh||NIL|
|Rs 2.5 lakh to Rs 5 lakh||5% (Tax rebate of Rs 12,500 available under section 87A)|
|Rs 5 lakh to Rs 7.5 lakh||10%|
|Rs 7.5 lakh to Rs 10 lakh||15%|
|Rs 10 lakh to Rs 12.5 lakh||20%|
|Rs 12.5 lakh to Rs 15 lakh||25%|
|Rs 15 lakh and above||30%|
|Income limit||Surcharge Rate on the amount of income tax|
|Net income exceeds Rs 50 lakh but doesn’t exceed Rs 1 crore||10%|
|Net income above Rs 1 crore but doesn’t exceed Rs 2 crore||15%|
|Net income exceeds Rs 2 crore but doesn’t exceed Rs 5 crore||25%|
|Net income exceeds Rs 5 crore||37%|
As per Income Tax Act 1961 Section 139(1) if any persons income tax above taxable limit then he required to file ITR. If income of Sole Proprietor is above ₹. 5 Lac then its mandatory to file income tax return. Tax return filing is moral responsibility. Timely income tax filing helps to build income stability for personal or business loan. For business expansion one may ask banker for loan. Income tax return is key documents which banker demands to check credit score. Below are benefits for tax return filing
Tax Audit is a detail reporting of firms annual financial statement by Chartered Accountant firm on behalf of firm to tax authorities. Section 44 AB of income tax act gives condition when this audit is applicable. Below are primary condition Tax Audit applicability for Sole Proprietor business.
|Income Tax Form||Description|
|ITR 3||Applicable to the individuals and HUFs having income from a proprietary business or profession.|
|ITR 4||Applicable to individual/proprietor carrying out business or profession under presumptive income.|
|S.No.||Head of Income||List of Documents|
|4||Income From Other sources||