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.

Team Digit

What is ITR Filing?
What Qualifies as Business & Self-Employment?
ITR Form for Self-Employed, Businesses, & Proprietors
Who is Eligible for Presumptive Taxation?
Online & Offline ITR Filing
Documents Required
How to Choose the Right ITR Form?
Due Date for Filing ITR Form
IT Slabs for FY 2025-26
Frequently Asked Questions

What is ITR Filing?

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.

What Qualifies as Business?

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”.

What Qualifies as Self-Employment?

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”.

Types of ITR Form for Self-Employed, Individual Businesses, & Proprietors

ITR for small businesses involves filing different business income ITR forms, as the case may be. Here are the form categories for ITR filing for business.

ITR Form	Eligibility
ITR-3	To be filed by an individual having business income or from a profession.
ITR-4 (Sugam)	For firms other than LLPs that fall under presumptive tax schemes, and which have a total income up to ₹50 lakhs. Their income is calculated under Sections 44AD, 44ADA, and 44AE.
ITR-5	For LLPs and partnerships that are not filing ITR 7.
ITR-6	For those companies that are not claiming exemption under Section 11.
ITR-7	For companies mandated to file returns from Sections 139(4A), 139(4B), 139(4C), 139(4D) only.

However, to file ITR for businesspersons and self-employed individuals, use ITR-3 or ITR-4, as the case may be.

Why Business Income, Proprietors & Self-Employed Individuals Should File ITR?

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.

Who is Eligible for Presumptive Taxation?

Presumptive taxation is a scheme for professionals whose gross revenue is up to ₹50 lakhs in the financial year and small businesses whose turnover is up to ₹2 crores, for FY 2022-23. However, the Union Budget 2023 increased these limits as follows.

Category	Revised limits (FY 2025-26)
Sec 44AD: For small businesses	₹3 crores
Sec 44ADA: For professions including legal, medical, engineering, accountancy, architecture, etc.	₹75 lakhs

Note that the increased limits will be applicable only if 95% receipts are submitted through online modes.

Under Section 44AD, small businesses that opt for presumptive taxation must declare profits of 8% for non-digital transactions or 6% for digital transactions. One can apply for presumptive taxation by filing ITR 3 or ITR 4.

This is an optional scheme under which those who are eligible and choose to pay tax presumptively are exempted from maintaining accounts, etc. The profit is assumed at 8% of gross receipts for businesses and 50% of the gross receipts for professionals in a financial year. Therefore, they have to pay Income Tax as per the Income tax rates applicable to them.

Under the presumptive scheme, assesses are eligible to claim tax-saving deductions under section 80C, all deductions under section 80 of Chapter VI A, and medical insurance premiums under section 80D.

Assesse have the choice to opt out of the Presumptive Scheme in the next financial year; however, they would not be able to claim the benefits of the scheme for the next five financial years.

How to File Online ITR for Individual Having Business Income?

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.

How to File Offline ITR for Small Proprietorship Business?

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.

What are the Documents Required for Filing ITR for Business and Self-Employed?

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.

How to Choose the Right ITR Form?

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.

What is the Due Date for Filing ITR Form for Small Business, Proprietorship and Self-Employed?

The deadline for filing the income tax return for an individual business or self-employed is as follows:

Category of Taxpayer	Due Date for ITR - FY 2025-26 (AY 2026-27)
Individual / HUF/ AOP/ BOI (businesses not required to be audited)	31st July 2026
Businesses (requiring an audit)	31st October 2026
Businesses requiring transfer pricing reports (in case they conducted international transactions or certain specified domestic entities)	30th November 2026
Revised return	31-Dec-26
Belated/late return	31-Dec-26
Updated return	31 December 2031 (4 years from the end of the relevant Assessment Year after Budget 2025 amendment)

Can ITR be Filed for the Previous Year?

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.

What are the Income Tax Slabs for Companies and Self-Employed Persons?

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

For Individuals (businessmen or self-employed) Less than 60 Years

Old Tax Regime FY 2025-26		New Tax Regime FY 2025-26
Income Tax Slab	Income Tax Rate	Income Tax Slab	Income Tax Rate
Up to ₹2,50,000	Nil	Up to ₹4,00,000	Nil
₹2,50,001-₹5,00,000	5% above ₹2,50,000	Between ₹4,00,001 and ₹8,00,000	5% of your total income that exceeds ₹4,00,000
₹5,00,001- ₹10,00,000	₹12,500 + 20% above ₹5,00,000	Between ₹8,00,001 and ₹12,00,000	₹20,000 + 10% of your total income that exceeds ₹8,00,000
Above ₹10,00,000	₹1,12,500 + 30% above ₹10,00,000	Between ₹12,00,001 and ₹16,00,000	₹60,000 + 15% of your total income that exceeds ₹12,00,000
		Between ₹16,00,001 and ₹20,00,000	₹1,20,000 + 20% of your total income that exceeds ₹16,00,000
		Between ₹20,00,001 and ₹24,00,00	₹2,00,000 + 25% of your total income that exceeds ₹20,00,000
		Above ₹24,00,000	₹3,00,000 + 30% of your total income that exceeds ₹24,00,000

For Senior Citizens (between 60 years and 80 years)

Existing Tax Regime FY 2025-26		New Tax Regime FY 2024-25
Income Tax Slab	Income Tax Rate	Income Tax Slab	Income Tax Rate
Up to ₹3,00,000	Nil	Up to ₹4,00,000	Nil
From ₹3,00,001 – ₹5,00,000	5% above ₹3,00,000	Between ₹4,00,001 and ₹8,00,000	5% of your total income that exceeds ₹4,00,000
From ₹5,00,001 – ₹10,00,000	₹10,000 + 20% above ₹5,00,000	Between ₹8,00,001 and ₹12,00,000	₹20,000 + 10% of your total income that exceeds ₹8,00,000
Above ₹10,00,000	₹1,10,000 + 30% above ₹10,00,000	Between ₹12,00,001 and ₹16,00,000	₹60,000 + 15% of your total income that exceeds ₹12,00,000
		Between ₹16,00,001 and ₹20,00,000	₹1,20,000 + 20% of your total income that exceeds ₹16,00,000
		Between ₹20,00,001 and ₹24,00,000	₹2,00,000 + 25% of your total income that exceeds ₹20,00,000
		Above ₹24,00,000	₹3,00,000 + 30% of your total income that exceeds ₹24,00,000

For Super Senior Citizens (above 80 years)

Existing Tax Regime FY 2025-26		New Tax Regime FY 2025-26
Income Tax Slab	Income Tax Rate	Income Tax Slab	Income Tax Rate
Up to ₹5,00,000	Nil	Up to ₹4,00,000	Nil
From ₹5,00,001 – ₹10,00,000	20% above ₹5,00,000	Between ₹4,00,001 and ₹8,00,000	5% of your total income that exceeds ₹4,00,000
Above ₹10,00,001	₹1,00,000 + 30% above ₹ 10,00,00	Between ₹8,00,001 and ₹12,00,000	₹20,000 + 10% of your total income that exceeds ₹8,00,000
		Between ₹12,00,001 and ₹16,00,000	₹60,000 + 15% of your total income that exceeds ₹12,00,000
		Between ₹16,00,001 and ₹20,00,000	₹1,20,000 + 20% of your total income that exceeds ₹16,00,000
		Between ₹20,00,001 and ₹24,00,000	₹2,00,000 + 25% of your total income that exceeds ₹20,00,000
		Above ₹24,00,000	₹3,00,000 + 30% of your total income that exceeds ₹24,00,000

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

Categories	Tax Rate	Surcharge
Section 115BA (Companies having turnover up to ₹400 crores as of FY 2019-20)	25%	7% (in the case that the company has a total income above ₹1 crore and up to ₹10 crores), 12% (in case the total income is above ₹10 crores
Section 115BAA	22%	10%
Section 115BAB	15%	10%
More than ₹400 Crores as of FY 2019-20	30%	7% (for a case where the total income of the company is above ₹1 crore and less than ₹10 crores) 12% (for a case where the company's total income is above ₹10 crores)

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

Categories	Income Tax Rate
Royalty or fees received from the Indian Government or any Indian person under an agreement made before 1st April 1976, which the Central Government has approved	50%
Any other income	40%

FAQs about ITR Filing for Business, Proprietorship, & Self-Employed Individuals

All

In which form is ITR to be filed by an individual having business income?

Small businesses need to file ITR-4 if they have opted for a presumptive tax scheme. However, if the company's turnover exceeds ₹2 crores, the taxpayer will have to file ITR-3.

How to calculate self-employment tax?

Persons who are self-employed need to pay their income tax based on their earnings. Deduct the expense from the revenues, and you can calculate the tax based on the balance. You will need to fill out the ITR-3 or ITR-4 form.

At what income do I have to pay tax if I am self-employed?

Any person who is earning an income of more than ₹12 lakhs, whether self-employed or salaried, has to pay tax under the new tax regime. Salaried persons have to file returns with the ITR-1 form, and self-employed people can choose between ITR-3 or ITR-4.

Can I claim an HRA exemption while living in a metro city?

Yes, you can claim HRA exemption if you're a salaried individual living in a metro city. For those in cities like Delhi, Kolkata, Mumbai, or Chennai, the exemption is 50% of your [basic salary + DA]. An HRA exemption calculator can be really handy to figure out your exact exemption and help you maximise your tax benefits.

What is the deadline for filing IT returns?

The deadline to file the ITR of FY 24-25 is 31st July 2025. You can simplify your ITR process by using an income tax calculator to calculate your tax exemption and then file the updated returns on the government portal.