A proprietorship is one of the simplest business structures in India, owned and managed by a single person. It’s easy to start, requires minimal registration, and gives the owner complete control. However, even a proprietorship must follow specific annual compliance requirements to remain legally valid and financially transparent.
1. What Is Proprietorship Compliance?
Since a proprietorship and its owner are the same legal entity, compliance mainly depends on the owner’s income, turnover, and business registration type. Though lighter than company compliance, ignoring these obligations can lead to penalties or tax issues.
2. Key Annual Compliances for Proprietorship
a) Income Tax Return (ITR)
The proprietor must file an income tax return using their PAN number.
- Form: ITR-3 or ITR-4 (for presumptive taxation)
- Due Date: 31st July (without audit) / 31st October (with audit)
- Audit: Required if turnover exceeds ₹ one crore for businesses or ₹50 lakh for professionals.
Filing the ITR helps maintain credibility and is necessary for applying for business loans.
b) GST Return (If Registered)
If turnover exceeds ₹40 lakh (goods) or ₹20 lakh (services), GST registration is mandatory.
- Monthly/Quarterly: GSTR-1 and GSTR-3B
- Annual Return: GSTR-9 (if turnover exceeds ₹2 crore)
- Due Date: 31st December (for annual filing)
Missing GST filings may attract penalties or cancellation of registration.
c) TDS Compliance (If Applicable)
If the proprietor deducts TDS on salaries, rent, or professional fees:
- Filing: Quarterly returns (Form 24Q/26Q)
- Due Dates: 31st July, 31st October, 31st January, 31st May
- Certificates: Form 16/16A to be issued to employees or vendors.
d) Professional Tax (State Specific)
In some states, proprietors must pay Professional Tax. It requires:
- A Professional Tax Registration Certificate (PTRC)
- Monthly or annual returns as per state rules
e) Maintaining Books of Accounts
Though not required to file with the ROC, proper books must be maintained for tax purposes.
Include:
- Sales & purchase registers
- Expense receipts and bank statements
- Inventory and asset details
These records are essential for audits and smooth financial management.
3. Benefits of Staying Compliant
Staying compliant brings long-term advantages such as:
- Easy loan approvals from banks
- Better business credibility
- Eligibility for government schemes and subsidies
- Avoiding interest, fines, and legal penalties
4. Simplify Compliance Management
Many proprietors struggle to track deadlines. To make it easier:
- Use accounting tools like Tally or Zoho Books.
- Set calendar reminders for ITR, GST, and TDS due dates.
- Consult a CA or tax expert for accurate filing.
- Keep invoices and receipts organised throughout the year.
Conclusion
Annual compliance for a proprietorship may seem simple, but it’s vital for maintaining transparency and growth. Filing returns, paying taxes, and keeping records ensure your business remains legal and trustworthy.
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