Proprietorship Accounting Consultancy in Chennai
Proprietorship businesses are required to file the Proprietor Income Tax return the same way as LLPs and the companies that are registered in India. In a legal sense, the proprietorship and owners are considered the same. Therefore, the tax return filed by the proprietorship and the proprietor is one and identical.
Because a sole proprietorship does not tax as a separate legal entity, its owners must file their taxes for business just like their individual tax return. Just like any other individual taxpayer, a proprietorship company can also claim an exemption from tax for proprietorship by the current income tax laws and by the slab rates that apply to his earnings.
The tax rates for income for registered businesses are calculated by flat rates.
Since the proprietorship companies are small, independent companies managed by one individual. The proprietorships that are not registered are some of the simplest to run.
Income Tax Returns for Proprietorship Companies in Chennai:
Proprietorship tax returns must be submitted every year, in the event of an exemption. Like we said the proprietor and proprietorship firm is considered the same individual. Two forms need to be filled out based on the type of proprietorship.1. Form ITR-3
This form is required to report income tax for a proprietorship company that is managed by a Hindu Undivided Family (HUF) or any other proprietor.
2. Form ITR-4
The proprietorship firm utilizes this form to file proprietorship tax filing as part of the presumptive tax scheme. This reduces the burden of tax compliance for small-sized businesses. The earnings of the business person are added to the tax paid by the owner himself. Thus, the taxes paid by the business become the personal tax burden of the owner. The owner is still entitled to tax deductions that are available for individuals, and/or Hindu Undivided Families.
Important checklist for Audit of Proprietorship:
Based on the annual turnover of the business A formal audit is needed to be completed. In these three scenarios the audit will be necessary:- If the revenue of the proprietorship business that conducts business is more than Rs.1 crore in the financial year.
- In the case of a professional, the audit must be conducted if gross receipts totals are more than Rs. 50 lakhs.
- If the proprietorship is subject to any tax scheme that is presumed to be presumptive, regardless of annual turnover an audit is required.