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Sole Proprietorship

What Is The Penalty For Not Filing Proprietorship ITR?

On Failure of Proprietorship ITR Filing, the owner might have to face some consequences. Read on to know more about it!

A Proprietorship is a business entity that has only one owner. A proprietorship is not a partnership, but it is treated as if it were a partnership for tax purposes. The owners of a proprietorship must report their share of income on their individual tax returns and pay any self-employment taxes they owe based on their share of profits. There is a due date for filing the Income Tax Return. In case a proprietorship owner fails to do so before the due date they have to pay a penalty amount as a result. If you are a proprietorship owner and want to know what will happen on the failure of the Proprietorship ITR filing before the due date, this article is for you. In this article, we will read about how to file ITR and Penalty For Not Filing Proprietorship ITR.

What is Proprietorship ITR?

ITR stands for Income Tax Return. The main objective of the ITR is to file your income tax returns every year and pay taxes on your taxable income. It also includes filing other forms such as Form-16, Form-8, etc., which the Income Tax Department in India requires for various purposes like claiming refunds, making payments towards interest and penalties, etc.

A proprietorship is a legal form of business ownership in which the owner of an unincorporated business (also called sole proprietor) owns all the assets and liabilities. The owner is also responsible for all the debts and obligations of his or her company, including taxes.

Eligibility for Filing Proprietorship ITR

There is a certain eligibility criterion that you must fulfill in order to file the income tax return on the properties ship you own. We’ve mentioned below the list of eligibility criteria.

  • If the owner is less than the age of 60 or 80 and has an annual income of more than ₹3 lakhs they have to file an ITR. 
  • If the annual income is more than ₹5 lakhs and the age of the owner is above 80 they must pay an income tax return.
  • Several tax exemptions and deductions are available if the owner is eligible for them under sections 10 A, 10 B, 80 IAB, 80 IB, and 80 IC.

Penalty for Not Filing Proprietorship ITR

The last date for filing ITR is before 31st July of a financial year. The Income Tax Department sends reminders to the taxpayers by email, SMS, etc. to ensure that everyone files their ITR before the due date. The income tax return is to be filed each year before the due date. Doing so we prevent any future problems and you would not have to pay any penalties.

In case a taxpayer forgets or misses the ITR filing deadline, they have to pay a maximum penalty amount of ₹10,000. However, this penalty amount is applicable up to the financial year of 2019-20. From the Financial year of 2020- 21 and so on the penalty amount has been reduced to ₹5,000. It is also a point to remember that if the income is less than that taxable amount you do not have to pay any penalty even if you file the ITR after the deadline.

If you own a proprietorship and want to start the process of filing an income Tax Return. You can take help from Vakilsearch. Go to our website and enter the required details such as your name and contact number. A legal consultant will contact you. If you have any queries you can ask them. They will solve all your queries and also help you with the ITR application process.

How to File Proprietorship ITR?

To file a proprietorship ITR you need to gather some documents and keep some important points in mind. We’ve mentioned below the steps that you must follow to file the income tax return of a proprietorship.

  • PAN card is issued to every taxpayer by the Income Tax Department. It is mandatory to have a PAN card to start the process of filing the income tax return for a proprietorship.
  • The owner of the proprietorship must have a PAN card and that PAN card is to be used for paying income tax.
  • To file the income tax return, you must register on the e-filing portal using your PAN card.
  • Go to the e-filing menu and select the option of the income tax return.
  • Select the assessment year, ITR form, and filing type.
  • Enter the required information and complete the submission.
  • You will get a new page that will ask for certain mandatory details, fill in the details carefully and click on continue.
  • After filling in all the relevant information, verify it. 
  • You can also choose the option of one physical filing or E-verification. The online portal allows you to change the information within 120 days after filling.
  • An option of ‘preview and submit’  will appear. Click on it.
  • Make sure before submitting that you check for any errors.
  • Once you submit the application you will get an OTP which has to be entered within 60 seconds for successful verification.

If you want help in filling the ITR returns you can contact Vakilsearch. Go to our website and enter the contact details a legal consultant will contact you and solve all your queries. They will also help you with the income tax return filing procedure and make it easy for you.


A proprietorship is a form of business ownership in which the owner, called the “proprietor”, has complete control over all aspects of the business. This includes managing and running the company as well as making decisions about what to do with its profits. It is also known as a sole proprietorship. 

Proprietorship owners have to file income tax returns and they have to do so before the due date if they want to avoid any difficulties. If you want help in filling out the ITR or filling out the application you can contact Vakilsearch. We have a team of Legal experts and lawyers who will guide you through the entire process and make it easy and hassle-free for you.

Did you know?

In a proprietorship, the income of the business is completely considered as the income of the business owner as he or she is the sole owner of it.

Read more:

  1. How to File an ITR in India: A Guide
  2. Complete details about Sole Proprietorship Characteristics

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