Income Tax

ITR for Proprietorship

Like any other incorporated entities such as partnerships and companies, a proprietorship also must pay tax on its revenue. In the legal sense, a proprietorship is treated like the proprietor himself, the income tax that has to be filed follows the same procedure that of filing returns of the proprietor himself. Therefore the laws that govern the payment of income tax of the proprietor govern the proprietorship as well.

Process of Registration

1. Form ITR-3: This form should be used to file income tax if the proprietorship is run by a Hindu Undivided family or any other proprietor.
2. Form ITR-4 Sugam: This form is different from the previous form as this form is used by proprietorships that fall under presumptive tax schemes. This is to reduce the burden of compliances that fall upon small businesses. As mentioned before the income tax of a proprietorship is the same as that of the proprietor meaning, the business income of the proprietorship is added into the income of the proprietor himself. Therefore the business taxes become the personal taxes of the proprietor. He is still entitled to all tax deductions offered to individuals or Hindu Undivided Family (HUF) as the case may be.