Proprietorship Annual Filing

A sole proprietorship is not governed by a separate incorporation statute. Its annual filing obligations arise under the Income Tax Act, 1961 and the Central Goods and Services Tax Act, 2017 (if registered under GST). The Income Tax Act requires every person, including a sole proprietor, to file a return of income if the total income exceeds the basic exemption limit. For GST, registered proprietors must file monthly/quarterly returns and an annual return in Form GSTR-9.

The primary department for proprietorship annual filing is the Income Tax Department (www.incometax.gov.in) for income tax returns. For GST compliance, the GST Council through the GST Portal (www.gst.gov.in) handles return filings. Additionally, if the proprietorship is registered under the Shops and Establishment Act of the respective state, annual returns may need to be filed with the state labour department.

The process for proprietorship annual filing involves the following steps:

1. Gather financial records: Collect all income and expense statements, bank statements, and invoices.
2. Prepare income tax return: Compute total income and tax liability. File ITR-3 or ITR-4 (presumptive taxation) on the Income Tax portal.
3. File GST returns (if applicable): File monthly/quarterly GSTR-1 and GSTR-3B, and annual GSTR-9 by the due date.
4. Maintain books of accounts: If turnover exceeds prescribed limits, get accounts audited under Section 44AB of the Income Tax Act.
5. Submit other compliance: File professional tax returns (if applicable) and any state-specific annual returns.

The key forms for proprietorship annual filing are:

• ITR-3: For proprietors with business/profession income not eligible for presumptive taxation.
• ITR-4 (Sugam): For proprietors opting for presumptive taxation under Section 44AD.
• GSTR-1: For outward supplies (monthly/quarterly).
• GSTR-3B: Summary return for input tax credit and tax payment.
• GSTR-9: Annual GST return for regular taxpayers.
• Form 3CA/3CB/3CD: Audit report if turnover exceeds threshold.

Every sole proprietor whose gross total income exceeds the basic exemption limit (₹2.5 lakh for individuals below 60 years) must file an income tax return. There is no upper turnover limit. For GST, proprietors with aggregate turnover exceeding ₹40 lakh (₹20 lakh for special category states) must register and file returns. Proprietors with turnover up to ₹2 crore can opt for presumptive taxation under Section 44AD.

The due date for income tax return filing for proprietors is 31 July of the assessment year (unless audit is required, in which case it is 31 October). GST annual return (GSTR-9) is due by 31 December of the following financial year. Late filing attracts penalties and interest.

The government-prescribed fees for proprietorship annual filing are minimal. Below is a summary:

Note: Professional fees for a tax consultant or advocate are separate and not regulated by the government.