What is ITR 4?

This form is different from the previous form as this form is used by proprietorships that fall under presumptive tax schemes. This is to reduce the burden of compliances that fall upon small businesses. As mentioned before the income tax of a proprietorship is the same as that of the proprietor meaning, the business income of the proprietorship is added into the income of the proprietor himself. Therefore the business taxes become the personal taxes of the proprietor. He is still entitled to all tax deductions offered to individuals or Hindu Undivided Family (HUF) as the case may be.
The current ITR-4 applies to individuals and HUFs, Partnership firms (other than LLPs), which are residents and whose total income includes:
Business income according to the presumptive income scheme under section 44AD or 44AE
Professional income according to presumptive income scheme under section 44ADA
Income from salary or pension up to Rs 50 lakh
Income from one house property, not more than Rs 50 lakh (excluding the amount of brought forward loss or loss to be carried forward)
Income from other sources having income not more than Rs 50 Lakh (excluding income from lottery and race-horses )
Audit of Proprietorship
Depending upon the annual turnover of the proprietorship, sometimes it is required that the proprietorship be audited. There are two different circumstances where an audit needs to be done:
1. Turnover of the proprietorship firm conducting business is over Rs 1 crore during the year of assessment. In the matter of a professional proprietorship, an audit needs to be done if the total receipts of the proprietorship exceed the amount of Rs 50 lakh.
2. If a proprietorship is under any presumptive tax scheme, regardless of the annual turnover, an audit is required.
Documents Required for Proprietorship Income Tax Return Filing
As a sole proprietor, the following documents are required for ITR filing for Proprietorship Firm:
PAN card
Aadhar card
Bank account details
Form 16, 16A and 26AS
Advance tax payment challan
Deadline For Filing An Income Tax Return for a Proprietorship
The deadline for filing the income tax return for a proprietorship is dependent upon whether it needs to be audited under the Income Tax Act,1961 and whether it has conducted any international transactions.
1. Proprietorship that doesn’t require an audit has to file their income tax returns by the 31st of July.
2. Proprietorship that requires to be audited needs to file their income tax returns by the 30th of September.
3. Proprietorships that have conducted any international transactions or certain specified domestic entities have to file their income tax returns by 30th of November.