Income Tax Return: An Overview

An Income tax return (ITR) is a form used to file information about your income and tax to the Income Tax Department. The tax liability of a taxpayer is calculated based on his or her income. In case the return shows that excess tax has been paid during a year, then the individual will be eligible to receive an income tax refund from the Income Tax Department.

As per the income tax laws, the return must be filed every year by an individual or business that earns any income during a financial year. The income could be in the form of a salary, business profits, income from house property or earned through dividends, capital gains, interests or other sources.

Tax returns have to be filed by an individual or a business before a specified date. If a taxpayer fails to abide by the deadline, he or she has to pay a penalty. 

Business Income

Any person having a business or professional income of more than Rs.2.5 lakhs per year would be required to file an income tax return each year.

Any individual who has business income is said to be operating a proprietorship firm. Proprietorships operating in India are required to file an income tax return each year. Since proprietorships are considered to be one and the same as the proprietor, the income tax return filing procedure for a proprietorship is similar to individual income tax return filing.

Requirement for Filing Proprietorship Tax Return

All proprietors below the age of 60 years are required to file an income tax return if their total income exceeds Rs. 2.5 lakhs. In the case of proprietors over the age of 60 years but below 80 years, income tax filing is mandatory if the total income exceeds Rs.3 lakhs. Proprietors over the age of 80 years and above are required to file an income tax return if the total income exceeds Rs.5 lakhs.

Tax Rate

Tax Audit for Proprietorship

An audit would be required for a proprietorship firm if the total sales turnover is over Rs.1 crore during the financial year. In the case of a professional, an audit would be required if total gross receipts are more than Rs.50 lakhs during the financial year under assessment.

Due Date for Filing Proprietorship Tax Return 
 

The income tax return of a proprietorship that doesn't require an audit is due on 31st July. In case the income tax return of a proprietorship needs to be audited as per the Income Tax Act, then the return would be due on 30th September.

Tax Return for Proprietorships 
 

For the assessment year 2017-18 only, which relates to income earned in Financial Year 2016- 17, proprietorship firms would be required to file Form ITR-3 or Form ITR-4-Sugam. Form ITR-3 can be filed by a proprietor or a Hindu Undivided Family who is carrying out a proprietary business or profession. Form ITR-4-Sugam can be filed by a proprietor who would like to pay income tax under the presumptive taxation scheme.