ITR Filing for Business, Proprietorship & Self-Employed Individuals

Income tax return filing can be a very complicated process for small businesses and proprietorships. You have to be aware of many tax brackets and rules before you set out to file your income tax returns. However, once you understand how to do it, it becomes easy to complete it!

In this article, we will discuss how to file ITR for self-employed people and business owners.

ITR filing refers to the filing of the appropriate income tax form to declare the income tax you have paid in that year. Depending on the category of salaried or self-employed, there are various forms that you have to file. At present, there are 7 ITR forms that the corresponding person or organization can file.

The IT Act 1961 of India defines business as any trade, commerce, manufacture, or any other similar activity carried out to earn profits. The income is taxed under the head “Profit and gain from Business or Profession”.

As per the IT Act 1961, self-employment is a profession in which an individual sells their services to different employers without any long-term contract. The tax levied on the income comes under the head “Profit and gain from Business or Profession”.

1. ITR for Business Income and Proprietors

All companies, irrespective of whether they have undertaken business activities in that financial year or not, need to file an income tax return. Regardless of profit or loss, companies need to file income tax. Partnership firms need to file a NIL income tax return before the due date of the filing returns.

In India, all companies, irrespective of profit or loss, are expected to file ITR returns. Companies that are dormant and have undertaken no business decisions in a year are still expected to file returns.

There are two ways to file income tax for businesses: companies and the self-employed. One is the online method, and the other is the offline method. Both methods require the use of a computer.

However, companies or businesspersons not filing ITR-4 Sugam can take the help of a tax agent to file their returns. However, if you are keen on doing it on your own, follow the steps given in this article.

2. ITR for Self Employed

According to the IT Act 1961, income from self-employment or profession is levied a tax under the head “Profit and gain from Business or Profession”.

Individuals earning professional income are required to get their accounts audited by a Chartered Accountant and submit a tax audit report if their gross receipts are above ₹50 lakhs in a financial year. However, ITR for the self-employed does not need to be filed if there has been no business undertaking for that financial year.

You can only file the ITR-4 online, and here are the steps to do the same. Filling in the form online means you have to key in the values in the portal online directly and submit it.

• Step 1: Visit the official website for the filing of ITR-4, which is the income tax e-filing portal.
• Step 2: Log in to your account by entering PAN, password, and the Captcha code.
• Step 3: On the "e-file" menu, choose the "Income Tax Return" link.
• Step 4: The site will automatically fill in the PAN, so all you have to do is fill in a) Assessment year, b) ITR Form Number c) Filing type as "Original/Revised Return" d) Submission mode as "Prepare and Submit Online."
• Step 5: Proceed to “Continue.”
• Step 6: Read all the instructions and proceed to fill up the ITR-4 form by clicking on the "Save Draft" button from time to time to save the details as a draft.
• Step 7: Once completed, choose the verification option according to your convenience.
• Step 8: Choose the "Preview and Submit” button.
• Step 9: Verify the data that you have entered.
• Step 10: Submit the ITR.

Once the returns have been verified, you can view your ITR file through your account.

Use the above steps to file the ITR form for individual and self-employed people.

To complete the offline ITR, you will need to download the file from the website and, using Excel or Java utility tools, fill-up the form. Here are the steps:

• Step 1: Visit the income tax filing website.
• Step 2: Go to the “Downloads” section and choose "IT Return Preparation Software."
• Step 3: From this section, download the ZIP file of the utility and open the utility from the folder.
• Step 4: Next, you can fill in the mandatory fields for the ITR form you selected to fill.
• Step 5: Validate every tab and then calculate the tax.
• Step 6: Produce and save the XML file.
• Step 7: Now, you have to log in to your account by filling in the PAN number, password, and Captcha code. Then select login.
• Step 8: Choose the "e-file" menu.
• Step 9: Select the "Income Tax Return" link.
• Step 10: On the income tax return page, choose a) Assessment year, b) ITR Form Number, c) Filing type as 'Original/Revised Return' d) Choose submission mode as “Upload XML.”
• Step 11: Choose a verification method among the six available options.
• Step 12: Select "Continue."
• Step 13: Attach the ITR XML file and submit the file.
• Step 14: You can later view the uploaded file.

For businessmen, self-employed individuals, and companies, these are the following documents are required to file an ITR.

• PAN card
• Aadhaar card
• Loan documents to claim a rebate
• A balance sheet for the financial year
• Records of audit if applicable
• Certificates that show the tax deducted at the source (TDS)
• A challan copy of income tax payments, such as advance tax and self-assessment tax.

• Self-employed persons or business income ITR form includes the ITR-4 or ITR-3 forms. The income for ITR-4 has to be calculated by the presumptive tax method or the conventional way.
• ITR-5 can be filed by a company that is not an LLP or filing ITR-7.
• ITR-6 has to be filed by all companies unless excluded because they are claiming exemptions as charitable and religious trusts.
• ITR-7 is for those organizations that are charitable and religious trusts, NGO, colleges, universities or trade unions, political parties or scientific research institutes, news agencies, or trade unions.

Yes, you can file belated ITRs, anytime up to one year from the end of the relevant assessment year. You can submit tax returns up to four years after the assessment year's last date from FY 2025-26. However, check if you might have to pay a penalty for not filing ITR within the due date.

1. Tax Rates for Businesspersons or Self-Employed Persons - FY 2024-25 (AY 2025-26)

2. Income Tax Rates for Domestic Companies - FY 2025-26

3. Tax Rates for Foreign Companies – FY 2025-26