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Income Tax Return (ITR) filing of Sole Proprietor
(ITR Sole Proprietor)

What is Income Tax Return (ITR) filing?

Income tax return is a form in which the taxpayers file information about his income earned with Income Tax Department

Who Should file Income Tax Return (ITR) ?

It is mandatory to file Income tax return (ITR) in India if any of the conditions mentioned below is applicable to taxpayer:

1. If your gross Income is more than Rs. 2.50 Lakh
2. If you want to claim Income tax refund
3. If you wish to aply for Visa, Loan or Credit Card
4. For Making Capital
5. If taxpayer is Company or Partnership firm or LLP
6. If you have earned from investment in foreign assets

Penalty for late Income Tax Return (ITR) filing

According to Income tax laws, late filing penalty is Rs 5000/- (for filing before 31.12.2020) or Rs. 10000/- (for filing after 31.12.2020), However, those persons who have to file returns but have income less than 5 Lacs would have to pay a penalty of Rs. 1000/-

Income Tax Return filing process

“All Indian taxation” will help you to file your Income Tax Return (ITR)

Docuemnts Require for Income Tax Return Filing

1. PAN Number
2. Aadhar Number
3. Form 16 (If available)
4. Tax saving details (If any)
5. Income from Other Sources details (If Any)
6. Bank Account Statement
7. Sales & Purchase details



Income Tax Slab Rate for AY 2020-21 for Individual ( Resident or Non-resident)

Net income range
Income-Tax rate
Up to Rs. 2,50,000*
Nil
Rs. 2,50,001- Rs. 5,00,000
5%
Rs. 5,00,001- Rs. 10,00,000
20%
Above Rs. 10,00,000
30% 


Plus: -
Surcharge: - 10% of income tax  (If taxable income > Rs. 50 lacs)
15% of income tax  (If taxable income > Rs. 1 crore)
25% of income tax  (If taxable income > Rs. 2 crore)
37% of income tax  (If taxable income > Rs. 5 crore)

Health and Education cess: - 4% of (Income Tax + Surcharge)

* Rs 3,00,000 in case of Senior Citizen (who is of the age of 60 years or more but less than 80 years)
* Rs 5,00,000 in case of Super senior Citizens (who is of the age of 80 years or more at any time during the previous years)

Note: - 
  • A resident individual (other than huf) is entitled for rebate under section 87A if his total income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or Rs. 12,500, whichever is less.
  • Saving Interest exempt from income tax upto 10k p.a for person income below 5 Lacs
  • Saving Interest exempt from income tax upto 50k p.a for person income below 5 Lacs (for senior citizen)
  • Standard deduction of Rs 50,000 for Salaried and Pensioners
  •  Deduction u/s 80C = Rs 1.50 Lacs
  •  Deduction u/s 80CCD = Rs 50000 
  •  Deduction u/s 80D Self & family = Rs 25000
  •  Deduction u/s 80D Self & Family + Parents = Rs 50,000 (25000+25000)
  •  Deduction u/s 80D Self & Family + Sr. Citizen Parents = Rs 75,000 (25000+50000)
  • Deduction u/s 80D Self Sr. Citizen & Family + Sr. Citizen Parents = Rs 1,00,000 (50000+50000)
  •  Interest on Home loan deduction of  Rs. 2 Lacs

AY 2021-22

Section 115BAC inserted – granting an option to the Individual or HUFs

– In non-Business Income cases, such option to be exercised Every Year on or before furnishing the return u/s 139(1).
– In case of business income, such option can be exercised only once and same shall be valid for subsequent years as well. However, such option can be withdrawn only ONCE and can never be opted again.

Option I pay taxes as per the existing tax rate slab as under: –

Income Tax Slab Rate for AY 2021-22 for Individuals (resident or non-resident)

Net income range
Income-Tax rate
Up to Rs. 2,50,000*
Nil
Rs. 2,50,001- Rs. 5,00,000
5%
Rs. 5,00,001- Rs. 10,00,000
20%
Above Rs. 10,00,000
30% 

Plus: -
Surcharge: - 10% of income tax  (If taxable income > Rs. 50 lacs)
15% of income tax  (If taxable income > Rs. 1 crore)
25% of income tax  (If taxable income > Rs. 2 crore)
37% of income tax  (If taxable income > Rs. 5 crore)

Health and Education cess: - 4% of (Income Tax + Surcharge)

* Rs 3,00,000 in case of Senior Citizen (who is of the age of 60 years or more but less than 80 years)
* Rs 5,00,000 in case of Super senior Citizens (who is of the age of 80 years or more at any time during the previous years)

Note: - 
  • A resident individual (other than huf) is entitled for rebate under section 87A if his total income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or Rs. 12,500, whichever is less.
  • Saving Interest exempt from income tax upto 10k p.a for person income below 5 Lacs
  • Saving Interest exempt from income tax upto 50k p.a for person income below 5 Lacs (for senior citizen)
  • Standard deduction of Rs 50,000 for Salaried and Pensioners
  •  Deduction u/s 80C = Rs 1.50 Lacs
  •  Deduction u/s 80CCD = Rs 50000 
  •  Deduction u/s 80D Self & family = Rs 25000
  •  Deduction u/s 80D Self & Family + Parents = Rs 50,000 (25000+25000)
  •  Deduction u/s 80D Self & Family + Sr. Citizen Parents = Rs 75,000 (25000+50000)
  • Deduction u/s 80D Self Sr. Citizen & Family + Sr. Citizen Parents = Rs 1,00,000 (50000+50000)
  •  Interest on Home loan deduction of  Rs. 2 Lacs
Read in details about deduction under chapter 6A here


Option II Section 115BAC A- new tax regime for Individual and HUF has been proposed by the Finance Bill, 2020 to tax the income of such assessees at lower tax rates if they agree to forego prescribed deductions and exemptions under the Income Tax Act– pay taxes as per the new regime as under: –
Net income range
Income-Tax rate
Up to Rs. 2,50,000*
Nil
Rs. 2,50,001- Rs. 5,00,000
5%
Rs. 5,00,001- Rs. 7,50,000
10%
Rs. 7,50,001- Rs. 10,00,000
15%
Rs. 10,00,001- Rs. 12,50,000
20%
Rs. 12,50,001- Rs. 15,00,000
25% 
Above Rs. 15,00,000
30% 

Plus: -
Surcharge: - 10% of income tax  (If taxable income > Rs. 50 lacs)
15% of income tax  (If taxable income > Rs. 1 crore)
25% of income tax  (If taxable income > Rs. 2 crore)
37% of income tax  (If taxable income > Rs. 5 crore)

Health and Education cess: - 4% of (Income Tax + Surcharge)


Taxpayer will have to give up following exemptions and deductions while choosing the new tax regime.
1.      LTA Allowance
2.      House Rent Allowance
3.      Conveyance Allowance
4.      Daily expenses in the course of employment
5.      Relocation allowance
6.      Helper allowance
7.      Children education allowance
8.      Other special allowances [Section 10(14)]
9.      Standard deduction
10.  Professional tax
11.  Interest on housing loan (Section 24)
12.  Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)
 

Audit for Proprietorship

Income Tax laws make it mandatory for a proprietorship to get its books of account audited under the following conditions:
  • If the total sales of the proprietorship exceeds Rs 1 crore during the financial year.
  • If the total gross receipts of the professional exceed Rs 50 lakhs during the financial year.
  • If the proprietorship had opted for the presumptive scheme and the income claimed is lower than the deemed profits and gains under the scheme.
  • u/s 44AD, u/s 44ADA, u/s 44AE no tax audit require

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