Explore all the details you need about Proprietorship Compliance, tailored for your needs.
Running a Sole Proprietorship in India comes with a set of crucial financial and legal responsibilities. Compliance with various tax and regulatory requirements is essential to ensure your business's smooth operation and growth. This includes filing Income Tax Returns, TDS Returns, GST Returns, EPF Returns, maintaining accurate accounting records, and sometimes undergoing a Tax Audit.
Filing tax returns is an essential obligation for businesses operating as sole proprietorships in India. At Solocorp, we understand the significance of Compliance with Indian tax laws and the potential benefits that come with it. Our comprehensive services are designed to assist business owners in navigating the intricate Compliance.
To navigate these compliance obligations seamlessly, Solocorp offers expert assistance and a user-friendly platform, making the process efficient and hassle-free for Sole Proprietors.
By partnering with Solocorp, you can fulfill your tax obligations and explore opportunities to optimize your tax benefits, allowing your business to succeed while following tax rules.
Yes, under the Income Tax Act in India, proprietorship firms must file income tax returns based on the age and income of the Proprietor:
Below 60 Years: Proprietors below 60 years of age must file an income tax return if their total income exceeds Rs. 3 Lakhs.
Between 60 and 80 Years: Proprietors aged between 60 and 80 must file an income tax return if their total income exceeds Rs. 3 Lakhs.
Above 80 Years: Proprietors aged 80 years and above must file an income tax return if their income exceeds Rs. 5 Lakhs.
Filing ITR before the deadline is crucial because it allows business losses to be carried forward for future use. Additionally, certain deductions under sections like 10A, 10B, 80-IA, 80-IAB, 80-IB, and 80-IC can only be claimed if the proprietorship's ITR has been filed on or before the due date.
An alternative tax regime for proprietors was introduced by Finance Act 2020 as Section 115BAC. Assesses must give up specified exemptions and deductions to take advantage of this tax regime.
The Income tax rate for a Proprietor who opts for the alternate tax regime:
| Net Income Range | Rate of income-tax (%) (FY 2022-23) | Rate of income-tax (%) (FY 2023-24) |
|---|---|---|
| Up to Rs. 2,50,000 | - | - |
| Rs. 2,50,001 to Rs. 3,00,000 | 5 | - |
| Rs. 3,00,001 to Rs. 5,00,000 | 5 | 5 |
| Rs. 5,00,001 to Rs. 6,00,000 | 10 | 5 |
| Rs. 6,00,001 to Rs. 7,50,000 | 10 | 10 |
| Rs. 7,50,001 to Rs. 9,00,000 | 15 | 10 |
| Rs. 9,00,001 to Rs. 10,00,000 | 15 | 15 |
| Rs. 10,00,001 to Rs. 12,00,000 | 20 | 15 |
| Rs. 12,00,001 to Rs. 12,50,000 | 20 | 20 |
| Rs. 12,50,001 to Rs. 15,00,000 | 25 | 20 |
| Above Rs. 15,00,000 | 30 | 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
| 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 under Section 111A or Section 115AD | Nil | 10 | 15 | 15 | 15 |
| Long-term capital gain under Section 112A or Section 115AD, or Section 112 | Nil | 10 | 15 | 15 | 15 |
| Dividend income not covered under special tax rate sections 115A, 115AB, 115AC, 115ACA | Nil | 10 | 15 | 15 | 15 |
| Unexplained income under Section 115BBE | 25 | 25 | 25 | 25 | 25 |
| Any other income | Nil | 10 | 15 | 25 | 37 |
For the Assessment Year 2024-25, if a Proprietor chooses the alternate tax regime as per Section 115BAC, the surcharge rate will be 25%, contrasting with the previous rate of 37%.
The Presumptive Taxation Scheme for proprietorship is a provision in the Income Tax Act designed to ease the tax burden on small taxpayers in India. Its purpose is to enable small businesses to operate without the heavy compliance obligations. Businesses that opt for this scheme can calculate their income based on an estimated basis using Section 44AD. This scheme allows taxpayers to pay taxes at a minimum rate and eliminates the requirement to maintain detailed accounting records.
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:
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.
Streamline your sole proprietorship's compliance effortlessly with Solocorp. We are your trusted partner in meeting all your compliance requirements, simplifying the process, and ensuring you meet deadlines while adhering to tax regulations.
Our comprehensive services cover various aspects:
We make filing your income tax returns a breeze, ensuring accuracy and timeliness.
Our support extends to TDS return filing, helping you accurately report deductions and meet your obligations.
For GST-registered businesses, we offer a hassle-free solution for filing both GSTR-1 and GSTR-3B returns, ensuring you stay compliant with GST regulations.
We assist in EPF return filing, ensuring compliance with employee provident fund regulations.
We understand the intricacies of income tax on proprietorships, including tax slabs, deductions, and filing deadlines. Our team will guide you through the process efficiently and accurately.