Home / Proprietorship Compliance

Updated on 14 Apr 2021    9.00 AM IST | 4 min read

An Overview to Proprietorship Registration

Proprietorship firms needs to maintain compliances like LLP’s and companies (Public or Private limited company). Proprietorship firm compliance mainly includes income tax return filing whereas LLP & companies needs to submit both the reports – Income tax return filing to the income tax department and annual filing to the ministry of corporate affairs. Sole proprietorship firms also need to comply with TDS regulations, GST regulations, ESI regulations etc.

The requirement of compliance varies depending upon the type of entity, industry, state of incorporation, number of employees & sales turnover. It has very minimal statutory compliances as compared to public or a private limited company. In case of sole-proprietorship, a sole proprietor does not enjoy the benefit of separate legal entity and limited liability. The annual income of sole proprietor is considered as the annual income of the proprietorship firm. There is no need to file any annual report or financial statement to MCA. The major compliances of sole proprietorship firms are tax related periodic and annual compliances.


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Eligibility Consultation

Document Preparation

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Government Fees

Documents Required for Annual Compliances for Proprietorships Registration

  • Invoices of purchase & sales during a financial year
  • Invoices of expenses incurred during a financial year
  • Bank statements for all bank accounts in the name of firm in a financial year.
  • Credit card statement for expenses incurred by proprietor on behalf of a company (If any)
  • Copy of TDS challans deposited (if any)
  • Copy of GST returns filed (If any)
  • Copy of TDS returns filed (if any)

Procedure For Annual Proprietorship firm Compliance Fulfillment

The procedure for annual compliance fulfillment is as follows –

  • Maintain proper books of accounts
  • Preparation and filing of balance sheet.
  • Comply with GST requirements
  • File the income tax return to income tax department.

Major Compliances For A Proprietorship Firm

  1. Income tax filing – Every sole proprietor running a proprietorship firm has to mandatorily file income tax return, if his taxable income lies above the exemption threshold. In some of the cases, audit is also required.
  2. GST filing – Sole proprietors registered under GST has to mandatorily file GST returns monthly, quarterly and annually.
  3. TDS filing – Proprietors having TAN must file quarterly TDS returns as per TDS rules
  4. ESI return – All proprietors registered under ESI act has to mandatorily file ESI returns. ESI registration is required in case a proprietor employs 10 or more employees in a firm.

Penalty for not filing Proprietorship Compliances

  • Late filing or non-filing of income tax return before the due date will attract a penalty of Rs.200 per day.
  • Late filing or non-filing of GST return before the due date will attract penalty of Rs.200 per day.

Proprietorship Compliances FAQ’S

Sole proprietorship firm complies with income tax regulations, TDS regulations, GST regulations, ESI regulations.
No, there is no need for proprietors to prepare audited financial statement every year. A tax audit may be required depending on turnover and other criteria.
No, sole proprietorship firm doesn’t enjoy the benefit of separate legal entity and limited liability.
Rs.200 per day will be charged as a penalty for late filing or non-filing of income tax return.
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Due Dates

  • Monthly GSTR 8 (Summary of Tax Collected at Source (TCS) and deposited by e-commerce operators) for Mar 2021

    Apr 10th ,2021
  • Monthly GSTR 7 (Summary of Tax Deducted at Source (TDS) and deposited) for Mar 2021

    Apr 10th ,2021
  • GSTR 1 for Mar 2021 (turnover more than INR. 1.50 Crore)

    Apr 11th ,2021
  • GSTR 6 (Details of ITC received and distributed by ISD) Monthly Filing Due Date for Mar 2021

    Apr 13th ,2021
  • Last date of depositing the fifth instalment of advance tax (if liable to pay any) for FY 2020-21 for individual and corporate taxpayers

    Apr 15th ,2021
  • GSTR 3B for Mar 2021 (Annual Turnover of more than Rs 5 Cr in Previous FY)

    Apr 20th ,2021