File Income Tax Return in India for Sole Proprietorship in 11 steps: Procedures

In this article , the procedure to file income tax return in India for sole proprietorship has bee thoroughly discussed.

Table of Contents

file income tax return in india for sole proprietorship

File Income Tax Return in India for sole proprietorship

A proprietorship is required to pay tax on its revenue similar to that of other incorporated businesses like a partnership or an organization. A proprietorship is viewed legally as the owner himself and the income tax returns must be filed similarly to those of the owners. The laws governing the payment of the proprietor’s taxable income, therefore, also applied to the proprietorship. Proprietorship corporations are simple to administer since they are small and autonomous companies run by individuals.


Sole proprietors file their business taxes alongside their personal returns, and the business is not taxed as a separate legal body. According to current income tax regulations and in accordance with the applicable slab rates for his income, a proprietorship organization has the same rights to a proprietorship tax deduction as any other individual taxpayer does.

How to file Income Tax Return in India for sole proprietorship

Proprietorships are legally obligated to file tax returns each year unless they are excluded.  As previously noted, the proprietor pays the proprietor’s income tax. The method to file the Income Tax Return in India for sole proprietorship can either be done practically or through a digital e-filing portal with the proprietor’s digital signature.

In order to file Income Tax Return in India for sole proprietorship, two distinct documents are needed to be submitted based on the type of ownership.

ITR-3: ITR-3 is a form that is appropriate for resident persons and Hindu Undivided Families (HUFs). In order to file Income Tax Return in India for sole proprietorship, a taxpayer must derive the revenue through a proprietary company or profession.

ITR-4: ITR-4 is a form appropriate for those Individuals who chose a presumptive income scheme.  The detail of this scheme has been described under Section 44AD, Section 44AE, and Section 44ADA. Form ITR-4 must be filed by taxpayers whose net revenue does not exceed 50 lakh rupees.

Steps to file Income Tax Return in India for sole proprietorship digitally

  1. The PAN card is required as the initial step. The Income Tax Department is responsible for generating PAN cards. The cardholder is issued with a special Permanent Account Number (PAN) which is used in order to conduct tax-related services.
  2. Since the proprietorship lacks a separate legal body, the PAN card of the proprietor can be possibly utilized in order to submit the income tax and to file income tax return in India for sole proprietorship.
  3. Getting registered under the e-filing portal is necessary. If you are already a registered user, you must access your account using your PAN details.
  4. Now choose “Income Tax Return” from the e-filing option.
  5. The following options must be chosen on this page: Assessment year; ITR form; Filing type (original or updated); and Prepare and send in the Submission Mode.
  6. Hit enter to proceed. On the next page that follows, you must answer all the mandatory details.
  7. Addressing certain fields is necessary while others are optional depending on their usefulness.
  8. After submitting the details in the fields on the new page, you need to choose a validation procedure.
  9. There are 2 digital and 1 practical way for filing. By proceeding with the e-filing procedure, you will be able to authenticate your electronic filing immediately after you submit the necessary details. You will have the option for re-verification of your details after 120 days. You can make any essential amends at that time.  You can select “I do not wish to e-verify”  to continue without it.
  10. You can choose the ‘Preview and Submit’ option. This option will help you preview the document to check for any mistakes before filing the return.
  11. You can choose to authenticate your e-filing with the e-verify selection. You can either choose OTP or Electronic Verification Code (EVC) to confirm that you have file Income Tax Return in India for sole proprietorship. The OTP or EVC must be entered within 60 seconds for the verification to be completed through the electronic platform.

Deadline to file Income Tax Return in India for sole proprietorship

The due date to file an Income Tax Return in India for sole proprietorship depends on whether it needs to be audited based on Income Tax Act,1961, or whether or not the owners have been indulged in any foreign operations.

  • The last date for sole proprietorships to file their income tax returns without needing an audit is July 31st.
  • The deadline for filing income tax returns for business organizations that are subject to audit is September 30.
  • Ownerships with any offshore transactions or a few domestic enterprises must file their ITR by November 30.

It is necessary to follow the tax regulations and to file Income Tax Return in India for sole proprietorship before the due date.

Income Tax Act Audit for a Sole Proprietorship

The guidelines that must be followed during an audit are laid out in the Income Tax Act of 1961. According to the Income Tax Act, a certified Chartered Accountant must conduct the audit for a sole proprietorship. The CA must verify that the accounting records are appropriately managed and that the ownership firm has adhered to all applicable regulations.

It could be essential to conduct a proprietorship audit depending on the yearly turnover of the business. Under the following three situations, an audit is crucial:

  1. If the operating revenue of the sole proprietorship surpasses one crore rupees.
  2. If the entire annual revenue of a professional proprietorship exceeds Rs 50 lakh, an audit is mandatory.
  3. An audit is necessary if a proprietorship is liable to a presumptive tax scheme, irrespective of yearly production.


The following article explains how to file income tax return in India for sole proprietorship along with a description of the procedures and the due date for submitting an ITR.

You can speak with Odint Consultancy if you have any additional questions on the aforementioned subject. We’ll be here to answer your inquiries.


Section 234 F of the Income Tax Act makes it illegal to not file an ITR for sole proprietorship. Submitting the ITR after the deadline is subjected to a penalty of up to Rs. 10,000.

ITR-3 and ITR-4 are used by sole proprietorships to submit their income tax returns.

According to the Income Tax Act, if the total income is greater than Rs. 3 lakhs, all owners under the age of 60 must file an income tax return.