Renu Suresh
Expert
Published on: Mar 27, 2026
Income Tax Rate for Proprietorship – For FY 2024-25/AY 2025-26
The income tax rate for proprietorships in India is determined based on the income tax slabs applicable to individuals, as proprietorships are not separate legal entities. The proprietor's income from business or profession is combined with their personal income for tax calculation. These rates vary according to the total income, with different slabs for general taxpayers, senior citizens, and super senior citizens. Understanding the applicable tax rate on sole proprietorships and slabs is essential for proprietors to ensure accurate compliance, optimize tax liability, and benefit from available deductions and exemptions.
This article looks at the Income Tax Rate for Proprietorship – For FY 2024-25/AY 2025-26.Income Tax Return for Proprietorship Firms
The income tax rate for sole proprietorships is the same as the income tax rate for individuals. Per the regular tax regime, all proprietors below 60 years must file an income tax return if the total income exceeds Rs. 2.5 lakhs.- For proprietors over 60 years but below 80 years, income tax filing is mandatory if the total income exceeds Rs.3 lakhs.
- Proprietors over 80 years and above must file income tax returns if the total income exceeds Rs.5 lakhs.
Income Tax Return for Proprietorship Firms - Union Budget 2023-2024
- New income tax slab rates have been substantially revamped in the 2023-2024 budgets.
- A tax rebate limit of Rs.3 lakh has been raised for salaried and individual taxpayers under the new income tax regime.
- Tax rebates for individual and salaried taxpayers have increased from Rs.5 lakh to Rs.7 lakh under the new income tax regime.
Proprietorship Tax Rate AY 2025-26| FY 2024-25 under Normal Tax Regime
Sole Proprietor Tax Bracket: Proprietorship Tax Rate AY 2025-26 | FY 2024-25 – Proprietor's age is less than 60 years
Income tax rate for sole proprietorship for AY 2025-26 whose age is less than 60 years is given below,
| Net Income Range |
Rate of income-tax (%) |
| Up to Rs.2,50,000 | – |
| Rs.2,50,001 to Rs. 5,00,000 | 5 |
| Rs. 5,00,001 to Rs. 10,00,000 | 20 |
| Above Rs. 10,00,000 | 30 |
Sole Proprietor Tax Bracket: Proprietorship Tax Rate AY 2025-26 | FY 2024-25 –Proprietor’s age is between 60 and 80 years
The following income tax rate for sole Proprietorship applies to who turn 60 during the previous year but is younger than 80 on the last day of the previous year:| Net Income Range | Rate of income-tax (%) |
| Up to Rs. 3,00,000 | – |
| Rs. 3,00,001 to Rs. 5,00,000 | 5 |
| Rs. 5,00,001 to Rs. 10,00,000 | 20 |
| Above Rs. 10,00,000 | 30 |
Sole Proprietor Tax Bracket: Proprietorship Tax Rate AY 2025-26 | FY 2024-25–Proprietor’s age is above 80 years
This applies to Proprietors aged 80 or older at any time during the previous year.| Net Income Range | Rate of income-tax |
| Up to Rs. 5,00,000 | – |
| Rs. 5,00,001 to Rs. 10,00,000 | 20 |
| Above Rs. 10,00,000 | 30 |
Tax rate on Sole Proprietorship opting for an Alternate Tax Regime under Section 115BAC
An alternative tax regime for proprietors was introduced by the Finance Act 2020 as Section 115BAC. Assesses must give up specified exemptions and deductions to take advantage of this tax regime. The Income tax rate on sole Proprietorship opts for the alternate tax regime:| Net Income Range | Rate of income-tax (%) (FY 2022-23) |
Rate of income-tax (%) (FY 2023-24) |
| Up to Rs. 2,50,000 | – | – |
| Rs. 2,50,001 to Rs. 3,00,000 | 5 | – |
| Rs. 3,00,001 to Rs. 5,00,000 | 5 | 5 |
| Rs. 5,00,001 to Rs. 6,00,000 | 10 | 5 |
| Rs. 6,00,001 to Rs. 7,50,000 | 10 | 10 |
| Rs. 7,50,001 to Rs. 9,00,000 | 15 | 10 |
| Rs. 9,00,001 to Rs. 10,00,000 | 15 | 15 |
| Rs. 10,00,001 to Rs. 12,00,000 | 20 | 15 |
| Rs. 12,00,001 to Rs. 12,50,000 | 20 | 20 |
| Rs. 12,50,001 to Rs. 15,00,000 | 25 | 20 |
| Above Rs. 15,00,000 | 30 | 30 |
Rates of surcharge – For Assessment Year 2025-26 under the Normal Tax Regime
In addition to the Income Tax amount calculated, individuals must pay Surcharge and Cess based on the above-mentioned tax slabs. In respect of a Proprietor, the rate of surcharge for the Assessment Year 2024-25 is tabulated here:| Nature of Income | Range of Total Income | ||||
| Up to Rs. 50 lakhs (%) | Rs. 50 lakhs to Rs. 1 crore (%) | Rs. 1 crore to Rs. 2 crores (%) | Rs. 2 crores to Rs. 5 crores ((%) | More than Rs. 5 crores | |
| Short-term capital gain as per under Section 111A or Section 115AD | Nil | 10 | 15 | 15 | 15 |
| Long-term capital gain is covered under Section 112A or Section 115AD, or Section 112 | Nil | 10 | 15 | 15 | 15 |
| Dividend income not being dividend income chargeable to tax at the special rate under sections 115A, section 115AB, section 115AC, section 115ACA | Nil | 10 | 15 | 15 | 15 |
| Unexplained income chargeable to tax under Section 115BBE | 25 | 25 | 25 | 25 | 25 |
| Any other income | Nil | 10 | 15 | 25 | 37 |