Filing an Income Tax Return (ITR) for a sole proprietorship means reporting all business income, expenses, and profits to the tax department. Since the proprietor and the business are the same legal entity, personal and business incomes are filed together.

The process includes choosing the right ITR form based on turnover, maintaining proper records, calculating income, claiming deductions, and filing the return online. If turnover crosses a certain limit, a tax audit may be required. Filing within the deadline and keeping records safe is important. Expert guidance ensures full compliance and helps in availing tax benefits.

Documents Required for Sole Proprietorship ITR Filing

To file ITR for a sole proprietorship firm, you will need:

• PAN Card
• Aadhar Card
• Bank Account Details
• Form 16 / 16A / 26AS
• Advance Tax Payment Challans

Make sure these documents are ready for a smooth and hassle-free filing process.

Old Income Tax Regime Slabs for Proprietorship Business and Professionals (Below 60 Years)

• Income up to ₹2,50,000 – No Tax (Nil)
• Income from ₹2,50,001 to ₹5,00,000 – 5% Tax
• Income from ₹5,00,001 to ₹7,50,000 – 20% Tax
• Income from ₹7,50,001 to ₹10,00,000 – 30% Tax

Note:

• Surcharge and cess apply as per income slab.
• Deductions and exemptions under various sections can be claimed in the old regime.

Old Income Tax Regime Slabs for Senior Citizens (Sole Proprietors or Professionals)

• Income up to ₹5,00,000 – Nil
• Income from ₹5,00,001 to ₹10,00,000 – 20%
• Income above ₹10,00,000 – 30%

Old Income Tax Regime Slabs for Super Senior Citizens (Sole Proprietors or Professionals)

• Income up to ₹5,00,000 – Nil
• Income from ₹5,00,001 to ₹10,00,000 – 20%
• Income above ₹10,00,000 – 30%

New Income Tax Regime Slabs for Sole Proprietors and Professionals

• Income up to ₹2,50,000 – Nil
• Income from ₹2,50,001 to ₹5,00,000 – 5%
• Income from ₹5,00,001 to ₹7,50,000 – 10%
• Income from ₹7,50,001 to ₹10,00,000 – 15%
• Income from ₹10,00,001 to ₹12,50,000 – 20%
• Income from ₹12,50,001 to ₹15,00,000 – 25%
• Income above ₹15,00,000 – 30%

Income Tax Slabs Applicable Under the New Regime

• Income up to ₹2,50,000 – Nil
• Income from ₹2,50,001 to ₹5,00,000 – 5%
• Income from ₹5,00,001 to ₹7,50,000 – 10%
• Income from ₹7,50,001 to ₹10,00,000 – 15%
• Income from ₹10,00,001 to ₹12,50,000 – 20%
• Income from ₹12,50,001 to ₹15,00,000 – 25%
• Income above ₹15,00,000 – 30%

Income Tax Slabs for Domestic Companies (FY 2025–26, AY 2026–27)

• Turnover ≤ ₹400 crore: 25%
• Turnover > ₹400 crore: 30%
• Section 115BA: 25%
• Section 115BAA: 22%
• Section 115BAB: 15%

Surcharge Rates:

• 7% – When taxable income is between ₹1 crore and ₹10 crore
• 12% – When taxable income exceeds ₹10 crore
• Flat 10% – For companies under Section 115BAA and 115BAB

Note: A 4% Health & Education Cess is applicable on the total tax and surcharge amount.

Audit Requirement for Proprietorship

A proprietorship firm may require an audit based on its annual turnover. Audit is mandatory in the following cases:

• The firm’s total sales or turnover exceed ₹1 crore during the assessment year.
• Professional services with gross receipts over ₹50 lakh in a financial year require an audit.
• If the proprietorship opts for a presumptive taxation scheme, audit is needed regardless of turnover.

Steps for e-Filing ITR for a Proprietorship Firm

Step 1: Connect with Our Tax Experts

Discuss your queries with our tax professionals.

Step 2: Share Required Documents

Submit all necessary financial documents.

Step 3: Get Tax Calculation & Insights

Our CAs will compute your tax liability and suggest ways to reduce it.

Step 4: Hassle-free Tax Filing

We’ll file your return on time and help you avoid penalties.

How to File Income Tax Return for a Sole Proprietorship?

A sole proprietorship must file an annual tax return unless exempt. The proprietor and the business are treated as the same entity, so the owner files the return including business income under their personal income.

The return can be filed online (using an electronic signature) or offline. Based on the type of proprietorship, one of these forms is used:

• Form ITR-3: For proprietorships run by a Hindu Undivided Family (HUF) or another individual.
• Form ITR-4 Sugam: For proprietorships under presumptive taxation, designed to ease compliance for small businesses.

Since personal and business incomes are combined, the proprietor is also eligible for individual tax deductions as applicable. Sperso Filings (formerly Sperso filings) simplifies this entire process.

Deadline for Filing Income Tax Return for a Proprietorship

• Proprietors must file their ITR by July 31st if no audit is required.
• If the firm is subject to an audit, the due date is September 30th.
• For firms with international transactions or specified domestic entities, the deadline is November 30th.

Presumptive Income Tax Scheme

The Presumptive Income Tax Scheme offers a simplified taxation method for small businesses and professionals in India, easing compliance requirements. Under this scheme, eligible taxpayers can declare income at a fixed rate, without maintaining detailed books.

Key Features:

• Eligibility: Open to individuals, HUFs, and partnership firms (excluding LLPs) with turnover/gross receipts up to ₹2 crores in a financial year.
• Presumptive Income Rate: Income is presumed at 8% of turnover for most businesses and 50% of total receipts for professionals.
• No Detailed Books Needed: Maintenance of detailed accounting records is not required; only gross receipts must be tracked.
• No Expense Deductions: Business expenses and depreciation cannot be separately claimed; they are presumed covered under the fixed income rate.
• Advance Tax Payment: Quarterly advance tax is not mandatory; full tax can be paid when filing the return.
• Other Income Reporting: Taxpayers can use this scheme for eligible business income while declaring other income (like rent or capital gains) separately.
• Continuity: Once opted, the scheme should be continued for the next five years, subject to eligibility.

Note: Always refer to the latest tax rules for complete details.

Why Sperso Filings?

Sperso Filings simplifies ITR filing for sole proprietorships by ensuring tax law compliance, saving time, and reducing the burden on business owners. Our services include document handling, return preparation, filing, and dedicated customer support.