Business Income Tax Return (ITR) filing is a mandatory compliance under the Income Tax Act, 1961 for Sole Proprietorships and Partnership Firms. Filing the correct ITR ensures legal compliance, supports loan and tender applications, and helps maintain accurate financial records. Depending on the nature of the business, returns are generally filed using ITR-3, ITR-4, or ITR-5.
At Legal Terminus, we provide affordable and professional Business ITR Filing services, including tax computation, preparation of financial statements, bookkeeping support, and accurate return filing through the Income Tax portal. Our experts ensure timely, compliant, and hassle-free filing tailored to your business needs.
Business ITRs filed (Proprietor + Partnership)
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File your business income tax return at pocket-friendly prices
Proprietorship business income flows to the proprietor's PERSONAL income and is taxed at INDIVIDUAL SLAB RATES (same as salaried individuals). Section 87A rebate makes total income up to Rs.12 lakh effectively NIL TAX:
| Income Slab (FY 2025-26) | New Regime (Default) | Old Regime (Optional via Form 10-IEA) |
|---|---|---|
| Up to Rs.2.5 lakh | NIL | NIL |
| Rs.2.5-4 lakh | NIL | 5% |
| Rs.4-5 lakh | 5% | 5% |
| Rs.5-8 lakh | 5% | 20% |
| Rs.8-10 lakh | 10% | 20% |
| Rs.10-12 lakh | 10% | 30% |
| Rs.12-16 lakh | 15% | 30% |
| Rs.16-20 lakh | 20% | 30% |
| Above Rs.20 lakh | 25%-30% (progressive) | 30% |
| Section 87A rebate | Rs.60,000 (income up to Rs.12L = NIL tax) | Rs.12,500 (income up to Rs.5L = NIL tax) |
| Standard Deduction (if salary income also) | Rs.75,000 | Rs.50,000 |
Partnership Firm is a SEPARATE TAXABLE ENTITY under the Income Tax Act. It is taxed at a FLAT 30% rate (NOT slabs) regardless of income level. Section 87A rebate is NOT available for Partnership Firms. There is NO regime choice (always flat 30%):
| Tax Component | Rate | Applicability |
|---|---|---|
| Base Income Tax | FLAT 30% | On taxable income (after Sec 40(b) deductions) |
| Surcharge | + 12% of tax | If TOTAL income EXCEEDS Rs.1 CRORE |
| Health & Education Cess | + 4% of (tax + surcharge) | Always applicable |
| Effective Tax Rate (No surcharge) | 31.20% | 30% + 4% cess on 30% |
| Effective Tax Rate (With surcharge) | 34.94% | 30% + 12% surcharge + 4% cess |
| AMT (Section 115JC) | 18.50% of adjusted income | If normal tax falls below 18.5% |
| Section 87A Rebate | NOT APPLICABLE | Only for individuals - NOT firms |
Working Partners' REMUNERATION is allowed as a deduction to the firm subject to limits (effective from FY 2025-26 / AY 2026-27 per Budget 2024):
| Book Profit Slab | Maximum Allowable Remuneration | Notes |
|---|---|---|
| First Rs.6 LAKH of book profit | Rs.3 LAKH OR 90% of book profit (whichever HIGHER) | Budget 2024 DOUBLED first slab from Rs.3L to Rs.6L |
| On balance book profit (above Rs.6L) | 60% of book profit | Same as earlier |
| Partner INTEREST on capital | Up to 12% per annum (simple interest) | Section 40(b)(iv) - allowed as deduction |
| NEW Section 194T (FY 2025-26) | 10% TDS on partner payments > Rs.20,000/year | Firm must deduct TDS on salary/interest/bonus to partners |
| Section | Applicable To | Deemed Profit Rate |
|---|---|---|
| Section 44AD | PROPRIETOR (Indl / HUF) OR PARTNERSHIP FIRM (NOT LLP / Company); T/o up to Rs.2 Cr (Rs.3 Cr if digital > 95%) | 6% (digital) / 8% (cash) |
| Section 44ADA | Specified Profession (CA / doctor / lawyer); Gross receipts up to Rs.50 LAKH (proprietor only) | 50% of gross receipts |
| Section 44AE | Transport business (proprietor / firm) - up to 10 goods carriages | Rs.7,500 per vehicle per month |
| LOCK-IN | Once opted, must continue for 5 YEARS minimum | Opting out within 5 years triggers TAX AUDIT under Sec 44AB |
| Trigger | Penalty / Interest | Statutory Reference |
|---|---|---|
| ITR filing itself | NIL Govt fee | Section 139 |
| Belated ITR (income > Rs.5L) | Rs.5,000 penalty | Section 234F |
| Belated ITR (income up to Rs.5L) | Rs.1,000 penalty | Section 234F |
| Tax unpaid past deadline | 1% per month / part-month | Section 234A |
| Advance tax shortfall (< 90%) | 1% per month on shortfall | Section 234B |
| Books not maintained (Section 44AA) | Rs.25,000 penalty | Section 271A |
| Section 194T TDS default (Partnership) | Disallowance under Section 40(a)(ia) + interest 234E | FY 2025-26 onwards |
By subscribing to the above plans, you agree to abide by our following additional terms and conditions
Business ITR filing is more than just submitting a return — the correct form selection, proper tax calculation, and timely filing are extremely important to avoid notices, penalties, and unnecessary tax liability.
With LT Priority, your Proprietorship or Partnership Firm return is handled on a priority basis by experienced tax professionals who ensure faster processing, proper compliance, and accurate filing.
A Sole Proprietorship and a Partnership Firm are taxed differently under the Income Tax Act, making it essential to choose the correct ITR form and tax treatment. Proprietorship income is taxed as the owner's personal income through ITR-3 or ITR-4, while a Partnership Firm is treated as a separate taxable entity and generally files its return through ITR-5 or ITR-4, subject to applicable tax provisions and compliance requirements.
At Legal Terminus, we provide affordable Business ITR Filing services for both Proprietorships and Partnership Firms, including return filing, financial statement preparation, bookkeeping, and compliance support. Our experts ensure accurate filing, timely submissions, and complete assistance to keep your business tax-compliant and hassle-free.
| Entity Type | Regular Books | Presumptive Scheme (Sec 44AD/44ADA/44AE) |
|---|---|---|
| PROPRIETOR (Individual / HUF) | ITR-3 | ITR-4 (Sugam) - if T/o up to Rs.2 Cr |
| PARTNERSHIP FIRM | ITR-5 | ITR-4 (Sugam) - if T/o up to Rs.2 Cr (eligible) |
| Section 44AA Books Required? | YES (if income > Rs.1.2L or T/o > Rs.10L) | NO (Section 44AA exemption) |
| Tax Rate | Slab rates (proprietor) / Flat 30% (PF) | Same - applied on deemed profit |
| Partner Remuneration / Interest (PF) | Section 40(b) deductible to firm | NOT deductible under presumptive (post 2016) |
| Section 194T TDS on partner payments (PF) | Applicable (FY 2025-26 onwards) | Applicable |
Sole proprietor + own accountant prepares Balance Sheet + P&L ready + total income within personal slab rates (most under Rs.12L = NIL tax under New Regime). Elemental tier files ITR-3 with e-Verification + tax payment coord. Most cost-efficient.
Partnership Firm with in-house bookkeeper + ready Balance Sheet + P&L + partner remuneration / interest schedule computed. Elemental tier files ITR-5 + handles flat 30% computation + cess + surcharge (if applicable) + e-Verification. Same low price as proprietor case.
You have raw transaction data (bank statements + invoices + expenses) but no Balance Sheet ready. Enriched tier prepares Balance Sheet + P&L + IT Computation + depreciation + (for PF) Section 40(b) partner remuneration / interest computation + TDS reconciliation + ITR filing.
Active PF wanting end-to-end: year-round Tally bookkeeping + monthly transaction recording + partner capital account reconciliation + NEW Section 194T 10% TDS deduction on partner payments > Rs.20K/year (FY 2025-26 onwards - critical compliance) + Form 26Q filing + GST reconciliation + Balance Sheet + ITR-5. Full outsourced accounting + tax.
You've opted for the PRESUMPTIVE SCHEME under Section 44AD - declare 6%/8% of turnover as deemed profit + file ITR-4 (Sugam). PROPRIETOR + PARTNERSHIP FIRM both eligible (NOT LLPs). For PF: remember partner remuneration / interest NOT deductible under presumptive. We model both regular + presumptive at intake to recommend the better option.
If your turnover EXCEEDS Rs.50 LAKH, OR triggers Section 44AB tax audit (T/o > Rs.1 Cr), OR you're an LLP / company - these are OUT OF SCOPE of our standard 3-tier plans. Per T&C #1, contact our executive for a CUSTOMISED quote. LLPs have a separate LT service - LLP Annual Filing. Companies have - Company Annual Filing.
Filing your business ITR on time + accurately + with the right form delivers concrete legal + commercial benefits. Here's what timely filing delivers for proprietors + partnership firms:
TDS deducted from your business income (Section 194 series + new Section 194T for PFs) stays with the Government UNTIL you file ITR + claim the refund. For proprietors / PFs with significant TDS but lower actual tax liability, the ENTIRE TDS amount is refundable. Refunds typically credited within 30-45 days of e-Verification.
Section 234F belated penalty = Rs.5,000 (income > Rs.5L) or Rs.1,000 (income up to Rs.5L). PLUS Sec 234A/B/C interest at 1% per month. PLUS Section 271A Rs.25,000 if books not maintained. PLUS (for PF) Section 40(a)(ia) disallowance for Section 194T TDS non-deduction. Stacked penalties easily exceed Rs.30,000+ - timely filing eliminates all.
Business losses can be CARRIED FORWARD for 8 ASSESSMENT YEARS to set off against future profits - BUT only if ITR is filed BEFORE the original due date (31 July). Belated filing FORFEITS the carry-forward right (Section 80). For loss-making businesses in early years (very common for new partnerships), this is the single most valuable reason to file on time.
Banks + NBFCs require LATEST 2-3 YEARS of ITRs for: BUSINESS LOAN / MSME loan / working capital limits / overdraft / vehicle finance / equipment financing. Visa applications + insurance underwriting routinely ask for 3 years. Missing returns = loan rejection. Continuous timely filing builds your business's credit story.
For PFs - SECTION 40(b) Partner Remuneration deduction is one of the most powerful tax-saving tools. Budget 2024 DOUBLED the first slab to Rs.6 LAKH (effective FY 2025-26) - so a PF with Rs.20L book profit can deduct up to Rs.3L (on first Rs.6L) + 60% on Rs.14L balance = Rs.8.4L + Rs.3L = Rs.11.4L total - dramatically reducing firm-level tax. Our Enriched / Supreme tiers compute optimal remuneration structure.
Three tiers from Rs.2,499 (filing only) to Rs.14,999 (full Tally) - same pricing for proprietor + PF. Right-sized to actual workload. Per T&C #1, larger / complex cases get CUSTOMISED quotes. No artificial bundling.
Eight steps. End-to-end timeline: 3-7 working days from kickoff to ITR filing (Elemental); 7-15 days (Enriched); year-round engagement (Supreme - monthly bookkeeping cycle). Status updates run through ITR processing + refund.
Within 24 hours of plan selection + payment: STATUS UPDATE COMMITMENT activated. Welcome email + intake questionnaire confirming ENTITY TYPE (proprietor vs partnership firm) + business type + turnover + GST status + presumptive scheme suitability + (for PF) Partnership Deed details.
IT portal account verified / created for entity. PAN-Aadhaar linkage (proprietor) or Partner DSCs verified. Form 26AS + AIS + TIS downloaded - TDS / TCS / advance tax credits + (for PF) Section 194T compliance check.
For SUPREME: Tally ERP / Prime company file setup + Chart of Accounts + (for PF) Partner Capital Accounts + GST configuration (if registered). Monthly transaction recording begins. (Elemental / Enriched skip this.)
For ENRICHED / SUPREME: books closed + Balance Sheet + P&L + IT Computation + depreciation prepared. For PARTNERSHIP FIRM additionally: Section 40(b) partner REMUNERATION (using Budget 2024 Rs.6L first-slab limit) + Section 40(b)(iv) partner INTEREST (12% cap) computed + partner capital accounts reconciled + Section 194T TDS (if applicable, Supreme) deducted + Form 26Q filed.
Appropriate ITR form selected: ITR-3 (proprietor regular), ITR-4 Sugam (either presumptive), ITR-5 (PF regular). For PROPRIETOR: Old vs New regime calculation (Enriched / Supreme) + Section 87A rebate applied (if applicable). For PARTNERSHIP FIRM: Flat 30% computation + Section 40(b) deductions + surcharge if T/o > Rs.1Cr + 4% cess + AMT check (Section 115JC).
ITR populated. Draft return shared with client for review. Tax payable position confirmed. For PARTNERSHIP FIRM: partner-wise share of profit (taxable in partners' hands) computed + Section 194T TDS certificates issued (Supreme).
If TAX PAYABLE: client makes self-assessment tax payment via challan - PAID DIRECTLY BY CLIENT per T&C #2. CRN + BSR code captured. ITR submitted on portal. E-VERIFICATION within 30 days (Aadhaar OTP for proprietor / DSC for PF).
ITR-V Acknowledgement delivered. Refund tracking. Section 143(1) Intimation typically within 60-90 days. STATUS UPDATE COMMITMENT continues through refund + post-filing notices.
Six categories. Documentation varies by entity type (proprietor vs PF) + plan tier + presumptive scheme. Personalised checklist sent after intake.
Basics + statements for every return
FOR PROPRIETOR: PAN of proprietor (= business PAN) + Aadhaar + IT portal login + GSTIN (if registered) + Udyam Registration + Trade Licence + bank account (with IFSC) + email + mobile. FOR PARTNERSHIP FIRM: PAN of firm (separate from partner PANs) + Partnership Deed (registered) + GSTIN + each Partner's PAN + Aadhaar + DSC of authorised partner + IT portal login + bank account.
FORM 26AS (TDS / TCS / advance tax credits to your PAN - including Section 194 series + new Section 194T receipts for partners) + AIS (Annual Information Statement) + TIS. For PF: separate Form 26AS for firm and for each partner. We download + reconcile.
For ELEMENTAL: ready Profit & Loss + Balance Sheet + IT Computation. For PARTNERSHIP FIRM additionally: Partner Remuneration / Interest schedule under Section 40(b) (computed using Budget 2024 Rs.6L first-slab limit) + Partner Capital Account schedule + share of profit allocation. For ENRICHED / SUPREME, LT prepares these.
Books, PF documents & continuity
For ENRICHED / SUPREME: All BANK STATEMENTS Apr-Mar + sales invoices + purchase invoices + expense vouchers + asset purchases + loan documents + GST returns + TDS deductions made by you (Form 26Q) + TDS certificates received + advance tax challans. For PF: Section 194T TDS challans / certificates for partner payments (Supreme tier handles).
PARTNERSHIP DEED (registered, latest amended version) + Form 9 (registration certificate from Registrar of Firms if registered) + partner contribution records + profit-sharing ratio + partner remuneration agreement (if any) + Section 194T TDS records (FY 2025-26 onwards) + AMT computation (if applicable under Section 115JC). For ENRICHED / SUPREME.
Prior year ITR Acknowledgements (last 3 years) + intimation orders (Section 143(1)) + scrutiny / appellate orders + carry-forward losses (business loss) + unabsorbed depreciation + opening balances. For PF: prior year partner remuneration claimed + opening partner capital balances.
Got questions? We've got answers — straight, clear, and legally accurate.
For Proprietorships, business income is added to the owner's personal income and taxed as per individual slab rates. Eligible proprietors may also get benefits like the Section 87A rebate under the new tax regime.
For Partnership Firms, the firm itself is taxed separately at a flat applicable tax rate along with surcharge and cess as per the Income Tax Act. Partner remuneration and interest can be claimed as deductions subject to prescribed limits.
Depending on the nature of business and taxation method:
Our team selects the correct form after reviewing your business structure and income details.
Choose your plan based on the level of support you need:
Commonly required documents include:
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