Last updated: May 15th, 2023 12:57 PM

Income Tax Rate for Proprietorship – For FY 2023-24/AY 2024-25

Proprietors operating in India must file an income tax return annually. A proprietorship's income tax return filing is similar to individual income tax return filing. This article looks at the Income Tax Rate for Proprietorship – For FY 2023-24/AY 2024-25.

Income Tax Return for Proprietorship Firms 

The income tax rate for proprietorships is the same as the income tax rate for individuals.  Per the regular tax regime, all proprietors below 60 years must file an income tax return if the total income exceeds Rs. 2.5 lakhs.

• For proprietors over 60 years but below 80 years, income tax filing is mandatory if the total income exceeds Rs.3 lakhs.
• Proprietors over 80 years and above must file income tax returns if the total income exceeds Rs.5 lakhs.

Also, if the Proprietor files an income tax return before the deadline, losses in the business would be allowed to be carried forward. Also, the deduction under sections 80-IA, 80-IAB, 80-IB, and 80-IC, 10A, and 10B can only be permitted if the proprietorship income tax return has been filed before the due date.

Income Tax Return for Proprietorship Firms -  Union Budget 2023-2024 

• New income tax slab rates have been substantially revamped in the 2023-2024 budgets.
• A tax rebate limit of Rs.3 lakh has been raised for salaried and individual taxpayers under the new income tax regime.
• Tax rebates for individual and salaried taxpayers have increased from Rs.5 lakh to Rs.7 lakh under the new income tax regime.

Proprietorship Tax Rate AY 2024-25| FY 2023-24 under Normal Tax Regime

 Proprietorship Tax Rate AY 2024-25| FY 2023-24– Proprietor's age is less than 60 years

Net Income Range	Rate of income-tax (%)
Up to Rs.2,50,000	–
Rs.2,50,001 to Rs. 5,00,000	5
Rs. 5,00,001 to Rs. 10,00,000	20
Above Rs. 10,00,000	30

Proprietorship Tax Rate AY 2024-25| FY 2023-24–Proprietor’s age is between 60 and 80 years

The following tax rate applies to a Proprietor who turns 60 during the previous year but is younger than 80 on the last day of the previous year:

Net Income Range	Rate of income-tax (%)
Up to Rs. 3,00,000	–
Rs. 3,00,001 to Rs. 5,00,000	5
Rs. 5,00,001 to Rs. 10,00,000	20
Above Rs. 10,00,000	30

Proprietorship Tax Rate AY 2024-25| FY 2023-24–Proprietor’s age is above 80 years

 This applies to Proprietors aged  80 or older at any time during the previous year.

Net Income Range	Rate of income-tax
Up to Rs. 5,00,000	–
Rs. 5,00,001 to Rs. 10,00,000	20
Above Rs. 10,00,000	30

Tax rates for Proprietors opting for an Alternate Tax Regime under Section 115BAC

An alternative tax regime for proprietors was introduced by Finance Act 2020 as Section 115BAC. Assesses must give up specified exemptions and deductions to take advantage of this tax regime.  The Income tax rate for a Proprietor who opts for the alternate tax regime:

Net Income Range	Rate of income-tax (%) (FY 2022-23)	Rate of income-tax (%) (FY 2023-24)
Up to Rs. 2,50,000	–	–
Rs. 2,50,001 to Rs. 3,00,000	5	–
Rs. 3,00,001 to Rs. 5,00,000	5	5
Rs. 5,00,001 to Rs. 6,00,000	10	5
Rs. 6,00,001 to Rs. 7,50,000	10	10
Rs. 7,50,001 to Rs. 9,00,000	15	10
Rs. 9,00,001 to Rs. 10,00,000	15	15
Rs. 10,00,001 to Rs. 12,00,000	20	15
Rs. 12,00,001 to Rs. 12,50,000	20	20
Rs. 12,50,001 to Rs. 15,00,000	25	20
Above Rs. 15,00,000	30	30

Rates of surcharge – For Assessment Year 2024-25 under the Normal Tax Regime

In addition to the Income Tax amount calculated, individuals must pay Surcharge and Cess based on the above-mentioned tax slabs. In respect of a  Proprietor, the rate of surcharge for the Assessment Year 2024-25 is tabulated here:

Nature of Income	Range of Total Income
	Up to Rs. 50 lakhs (%)	Rs. 50 lakhs  to Rs. 1 crore (%)	Rs. 1 crore   to Rs. 2 crores (%)	Rs. 2 crores to Rs. 5 crores ((%)	More than Rs. 5 crores
Short-term capital gain as per under Section 111A or Section 115AD	Nil	10	15	15	15
Long-term capital gain is covered under Section 112A or Section 115AD, or Section 112	Nil	10	15	15	15
Dividend income not being dividend income chargeable to tax at the special rate under sections 115A, section 115AB, section 115AC, section 115ACA	Nil	10	15	15	15
Unexplained income chargeable to tax under Section 115BBE	25	25	25	25	25
Any other income	Nil	10	15	25	37

Rates of surcharge – For Assessment Year 2024-25 under alternate tax regime

The rate of surcharge in case of the Proprietor opting for an alternate tax regime as per section 115BAC will be 25% instead of 37% for AY 2024-25

Filing a Proprietorship Firm Tax Return – Form ITR 3

The applicant can file the ITR 3 form electronically on the Income tax e-filing web portal. Once the application is submitted, The confirmation of the receipt of the Income Tax Return Verification Form (ITR V) will be sent to the taxpayer through the mail ID registered in the e-filing portal. The taxpayer must print out this Form and fill in all details. This form will be sent to Processing Centre, Income Tax Department, Bengaluru, PIN; 560500 by ordinary or speed post. For more details on the Application procedure for ITR-3, click here.