Proprietorship Firm Annual Compliances

Compliances for Proprietorship Registration:

1.Income Tax Return: The sole proprietorships are required to file annual income tax return during each financial year, unless they are exempted. Further, the income rate applicable on this sole proprietorship firm is same as that of a proprietor.

The Income Tax Return can be filed either physically or online via e-filing portal of Income Tax. The sole proprietorship firms can file their income tax return through form ITR-3 or ITR-4.

ITR-3 Form: ITR-3 Form is to be filed by the proprietor having Income under the head ‘Profits or Gains of Business or Profession’.

ITR-4 Form: ITR-4 or SUGAM form is applicable for sole proprietorship firm having total income up to ₹50 lakh and having Income from Business and Profession which is computed on a presumptive basis.

2.TDS Return Filing

The TDS Return is to be filed where the proprietor has a valid TAN and the type of return to be filed depends upon the purpose of deduction. The types of TDS Return are:

Form 24Q – TDS on Salary

Form 27Q – TDS where deducted is a non-resident, foreign company

Form 26QB – TDS on payment for transfer of immovable property

Form 26Q – TDS in any other case.

3. GST Return filing: The proprietor needs to get his sole proprietorship registered for GST, if the aggregate business turnover exceeds Rs. 20 lacs. As per the GST Act, the GST Returns are to be filed if the taxpayer is registered under GST.

The returns to be filed for Sole Proprietorship firm registered under GST are GSTR-1 and GSTR-3B. These returns contain the details of outward and inward supplies of taxable goods and services, payment of taxes and are to be filed monthly or quarterly, as per the scheme availed by the proprietor.

4.EPF Return filing: The proprietor is required to get EPF registration if it employs more than 20 persons and accordingly, filing of EPF Return becomes mandatory.

5.Accounting and bookkeeping: The sole proprietor is required to maintain books of account, if the sale/turnover/gross receipts from the business is more than Rs. 25,00,000 or the income from business is more than Rs. 2,50,000 in any of the 3 preceding years.

6.Tax Audit: Sole proprietor is required to have a tax audit carried out if the sales, turnover or gross receipts of business exceed Rs. 1 crore in the financial year. However, he may be required to get their accounts audited in certain other circumstances.

List of Documents Required for Compliance of Sole Proprietorship

– PAN Card

– Aadhaar Card

– GST number, if applicable

– Details of sales and purchases

– MSME registration, if applicable

– Bank statements

– Credit card statements, if any