Proprietorship firms need to file the Proprietorship return filing in Punjab just like the Limited Liability Partnerships and the Companies that are registered. As the proprietor and the proprietorships are considered to be one, the income tax return filing for proprietorships and the proprietors is the same. As a sole proprietorship is not taxed differently the business owners file for their business taxes like their individual returns.
Similar to the individual taxpayers the proprietorship firms are also entitled to the proprietorship tax deduction under the Income-tax rules and the applicable slab rates.
How to do Proprietorship return filing in Punjab?
Proprietorship is required to file Proprietorship Tax returns every year in Punjab unless there is an exemption. Two forms are filed depending on the nature of the proprietorship firm.
Form ITR 3
Form ITR 3 is used to file the Income-tax if the proprietorship firm is run by any proprietor or by a Hindu Undivided Family
Form ITR 4
A proprietorship firm uses Form ITR 4 for proprietorship return filing under the presumptive taxation scheme. The Presumptive taxation scheme has reduced the compliance burden of small businesses comparatively.
A proprietor is also entitled to all tax deductions that are offered to the individuals or the Hindu Undivided Family.
What is the Presumptive Taxation Scheme?
The small taxpayers have been relieved due to the Presumptive Taxation Scheme. The Presumptive taxation scheme is allowing small businesses to carry on trade without being burdened by the excessive compliance-related requirements. Entities that are enrolled under the presumptive taxation scheme can compute the income on an estimated basis under section 44AD.
This presumptive taxation scheme also allows the taxpayer to pay taxes at a minimum rate. Also, the entities that have opted for this scheme need not maintain the book of accounts. This scheme has been an effective tool to reduce the compliance-related burden of the small and medium taxpayers.
The business income of the person adds to the personal income of the individual, this way the tax levied on the business becomes the personal tax of the proprietor. The proprietor is entitled to all deductions that are offered to all the individuals and the Hindu Undivided Family.
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