Proprietorship ITR Filing - Overview
📌 TL;DR - ITR Filing for Proprietorship Services at a Glance
Proprietors file in personal PAN, using ITR-4 if presumptive (Section 44AD business 8%/6% up to INR 2/3 crore; Section 44ADA profession 50% up to INR 50/75 lakh; Section 44AE goods carriage), OR ITR-3 if regular books / income above INR 50 lakh / capital gains / multiple property / foreign income / unlisted equity. Section 44AB tax audit at INR 1 crore business (INR 10 crore digital) or INR 50 lakh profession. Section 115BAC new regime is default; old regime via Form 10-IEA filed before the due date - a one-time election for business income earners. For FY 2025-26 the new-regime Section 87A rebate is up to INR 60,000, making income up to INR 12 lakh tax-free; the old-regime rebate stays INR 12,500 up to INR 5 lakh. Due dates AY 2026-27: 31 July 2026 (non-audit) / 31 October 2026 (audit). Section 234F late fee INR 1,000 / INR 5,000. Income-tax Act 2025 effective 1 April 2026. Patron Accounting starts from INR 3,499 one-time.
A proprietorship is not a separate legal entity for income tax purposes - the proprietor files in personal capacity using their own PAN, with business / professional income reported under Schedule BP (Business and Profession) of the relevant ITR form. The form choice is binary and decisive. ITR-4 (Sugam) is for proprietors opting the presumptive taxation scheme under Section 44AD (business: 8% cash / 6% digital of turnover up to INR 2 crore - INR 3 crore where cash receipts do not exceed 5%), Section 44ADA (profession: 50% of gross receipts up to INR 50 lakh - INR 75 lakh on the digital threshold), or Section 44AE (goods carriage). ITR-3 applies to all other proprietorship situations - regular books, income above INR 50 lakh, capital gains beyond the LTCG limit, multiple house properties, foreign income or assets, holding unlisted equity, or being a director in a company.
The compliance core sits in four interlocking decisions. First, presumptive vs regular books: presumptive simplifies dramatically but carries a 5-year lock-in under Section 44AD(4). Second, new vs old tax regime: the Section 115BAC new regime is default from AY 2024-25, and a proprietor wanting the old regime must file Form 10-IEA before the due date - a one-time election (unlike salary earners who switch annually). Third, tax audit under Section 44AB: business above INR 1 crore (or INR 10 crore if cash receipts and payments are each below 5%) or profession above INR 50 lakh triggers audit, and the due date shifts to 31 October. Fourth, advance tax under Section 208: if total tax liability exceeds INR 10,000, quarterly installments are due (15 June 15%, 15 September 45%, 15 December 75%, 15 March 100%), while presumptive proprietors pay 100% by 15 March. The Income-tax Act 2025 replaced the Income-tax Act 1961 effective 1 April 2026 (AY 2026-27), largely simplifying numbering and structure. Patron Accounting LLP runs end-to-end proprietorship ITR filing starting from INR 3,499 one-time per FY return.
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