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Proprietorship Compliance

Proprietorship firms are required to file income tax return like any other registered firms. Under the Income Tax Act, all proprietors below 60 years of age are liable to file an Income tax return if the total income exceeds 2.5 lakhs. Proprietors above 60 years must file an ITR if the income exceeds above 5 lakhs.

MSME registration can be obtained in the name of the business to establish that the Sole Proprietorship is registered under the Ministry of Micro, Small and Medium Enterprises.

TAN Registration must be obtained for the Proprietor from the Income Tax department if the Proprietor is making salary payments wherein TDS deduction is required or if last year the turnover of the proprietorship firm was above the threshold limit applicable for the purpose of audit, in that case obtaining of TAN and deducting and filling of TDS return is mandatory as per the Income Tax Act, 1961.

GST Registration is obtained if the same is applicable, check your eligibility

Import-export Code can be obtained from the DGFT in the name of the business - in case of a Proprietorship business undertaking export and/or import of goods into India.

Tax Return Filing

Proprietorships are also liable to be audited if the sales turnover exceeds INR 1 Crore during the financial year. For a professional, an audit is required if the receipts exceed INR 50 lakhs.

Firm Tax Return

Proprietorship firms are required to file the Income Tax return on or before July 30th in case the audit is not required but if the firm got audited then the due to date to file the ITR is September 30th.

Goods and Service Tax (GST)

Is GST applicable to your business?

Once you are registered under the regime of GST, following additional compliances related to GST will be applicable i.e.

  1. In case a company’s/LLP’s annual turnover is above 1.5 crores then GSTR-1/Sahaj (Detailed Sales Return) must be filed in monthly interval, companies/LLP’s having an annual turnover of less than 1.5 crores in that GSTR-1 will be filled in quarterly interval.
  2. In any case i.e. irrespective of turnover, GSTR -3B (Summary Return) needs to be filed in monthly interval.
  3. An annual GST return must(recommended) be filed by every business registered under GST, however the threshold turnover limit for the same is 5 Crores per annum.
  4. Apart from these other basic compliances such as E-way Bill, HSN code applicability and others to apply as per the eligibility of the business.

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