Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Taxed at your slab
Business profit is added to your other income and taxed at your slab — no separate company tax.
ITR-3 / ITR-4, presumptive option
File ITR-3, or ITR-4 if you opt for 44AD/44ADA presumptive taxation.
Slabs, presumptive and what you can claim
Because the business and the owner are one, the proprietorship’s profit is simply added to the owner’s other income (salary, interest, rent) and taxed at the individual slab rates under whichever regime — old or new — works out better. There’s no separate, lower corporate rate, but there’s also no double tax on taking the money out: the profit is yours once taxed. You can deduct genuine business expenses — rent, salaries, supplies, depreciation, interest on a business loan — against the receipts. If turnover is within the limits, the presumptive schemes simplify things: 44AD lets a small business declare 8% (6% for digital receipts) of turnover as income without detailed books, and 44ADA lets an eligible professional declare 50% of receipts, in both cases avoiding an audit if you stay at or above the presumptive rate. You file in ITR-3 (regular books) or ITR-4 (presumptive). Advance tax applies if your liability crosses ₹10,000 in the year. Choosing between the regular and presumptive routes, and between the old and new tax regimes, each year based on your actual margins and deductions is where a proprietor saves the most.