In This Article at Myonlineca, We will Discuss How to Save Tax in Proprietorship Firm. I will Tell you in Details About sole proprietorship tax rate in India & calculation and How To Save Tax in Business in India as proprietor.

How to Save Tax in Proprietorship Firm

How Are Sole Proprietorship Firms Taxed In India?

Sole Proprietorship is Business entity That is Run by a Single Person Who manages all The work In Organization and he/she is solely responsible for Profit and losses. When it comes to Tax A Sole Proprietorship is not considered to have a separate Legal identity from its owner. The owner and business are treated as same. So The owner of Sole Proprietorship is taxed On His Personal Income. His Business Income And Personal Income are considered to be same and Business income is included In Income tax.sole proprietorship income tax calculation Is carried out by the way of conditions and sole proprietorship tax rate given in the  Current Income Tax slab.

Sole Proprietorship Tax Rate FY 2017-18

Taxable income  – Tax Rate
1.  if you have earning up to Rs. 3,00,000 Per Year then you have not required to pay any taxes. the rate tax are applicable i.e is NIL.

2. if you have income more than Rs. 3,00,000 – – Rs. 5,00,000 per year as proprietor then sole proprietorship tax rate are 10%

3. if you have income more than Rs. 5,00,000 – Rs. 10,00,000 per year as proprietor then sole proprietorship tax rate are 30%

if you want to know more about the How Income tax works in the Propreitorship Firm then check the same.

How to Save Tax in Proprietorship Firm

In the Income Tax act, some Deductions are Mentioned that Can help Any sole proprietor, Individual or business etc can claim at the time of fillings of income Tax That can help in Saving tax. Below I will Mention Some Tax Deductions which will be subtracted from the gross total income and remaining balanced will be charged as Income tax in Accordance with prevailing sole proprietorship tax rate.

You can checkout below video on saving the tax by 46%.

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What is tax deduction For Sole Proprietorship In India?

  • You can save tax Under Section-80c,80ccc and 80ccd- If you have Invested in any Investment  Instrument that is specified in Section-80c, 80ccc, and 80ccd such as PPF Account, National Saving Certificate, Life Insurance Policy, Pension plans etc. You are eligible to claim a deduction under the Income tax.
  • You can Save Tax Under Section-80D, 80DD and 80DDB- IF you have made an expenditure to insure your own Health or Health of any relative Then you can Claim A Deduction under Section-80d, 80DD, and 80DDB.
  • Deduction on Home Loan – If you have taken a home loan, you can claim for a tax deduction for Repayment of principal amount Under section-80c, You can also Claim Tax Deduction on interest paid on home loan under section 24 and You can also Claim Deduction on repayment of Home Loan.
  • Save Tax By Educational Loans – If A person has taken an Educational Loan for Himself or For Children or any other relative then He can Claim For Tax deduction under section-8E In order to Save tax In India. However, The Deduction is allowed On repayment of interest and not on the principal.
  • Tax Deduction Under section-80CCG- The Person who has an annual income of less than RS 12 lakh can claim Deduction under Rajiv Gandhi Equity Savings Scheme for Investing in shares of specific companies and Mutual Funds.
  • Long-Term Capital Gains – In the event that any Long-Term Capital Gain is emerging to a person  from the Sale of Real Estate Property which was held as a Long Term Capital Asset, he can assert exclusion from paying such Capital Gain Tax on the off chance that he contributes the measure of pick up from offer of property in any specified investment instruments. Any Asset is considered as a Long Term Capital Asset if that advantage was held by the citizen for over 2 years. This Exemption is viewed as exceptionally useful while doing the Tax Planning to spare wage expense of a taxpayer.
  • Deduction for Donations under section-80G – IF a person is donating money to charity and social purpose or to the National Relief Fund, He/she can claim Deduction under section 80G of Income Tax Act.
  • Income From sources that are not taxable- If Your income Is from the source That is not considered to be Taxable income such as Receipts from Hindu Undivided Family, Shares from a partnership firm, Allowance for foreign services, Income from gratuity etc then You can save tax.


I Hope you like this article about How to Save Tax in Proprietorship Firm. still, if you are confused you can check out our website to know more about How To Save Tax in Business in India.