What is Proprietorship Return Filing?
Proprietorship firms file the Proprietor income tax return just like the LLPs and the Companies registered in India. In the legal sense, the proprietorship and the proprietor are considered to be one. Hence, the income tax return filing of the proprietor and the proprietorship are the same.
As a sole proprietorship is not taxed as a different legal entity, the business owners file their business taxes like their individual returns. Like any other individual taxpayer, a proprietorship firm is also entitled to a proprietorship tax deduction as per the prevailing Income tax rules and depending on the slab rates applicable to his income.
Whereas the income tax rates for the registered companies are assessed on flat rates.
As the proprietorship firms are small and independent businesses owned by a single person. These unregistered businesses are one of the easiest to manage.
How to file Income tax returns for proprietorship firms?
Is it necessary for Proprietorship Firms to File Income Tax Return?
Audit of Proprietorship.
- If the turnover of the proprietorship firm carrying business is exceeding Rs.2 crore during the financial year.
- In a professional case, an audit is required if total gross receipts are exceeding Rs—50 lakh.
- If the proprietorship is under any presumptive tax scheme regardless of the annual turnover, an audit is required.