Filing Taxes for a Proprietorship: Do You Need Separate ITRs for Firm and Personal Income?

I have the following query:

Filing ITR for Proprietorship Firm

1. If a person has a proprietorship firm and a PAN card in the firm's name, will he have to file two ITRs—one in the firm's name and the second in his personal name, or does he only need to file one return for the proprietorship firm?

Exempt Amount for Insurance and Loans

2. For a professional or a proprietorship firm, what is the exempt amount for Life Insurance, Home Loan, and Vehicle Loan?

Waiting for your support.

Thanks & regards,
Miss Akansha.

If he has two separate PAN cards (one for the firm and one for the individual), two returns are to be filed.

Tax Exemption Limits for Individuals

1. Life insurance premium - Up to 1 lakh under section 80C.
2. For individuals, home loan - Interest up to 1.5 lakhs tax-free plus principal up to 1 lakh under section 80C.

Regards.

Thank you for your reply. Please let me make it clearer for myself. For example, a person named Divya Mehra has a proprietorship firm named Professional Consultancy. She has a PAN card in her name, Divya Mehra, and also in her firm's name, Professional Consultancy. There is no other source of income, and all the income she earns is through her firm.

Filing Income Tax Returns for Proprietorship

Please let me know which of the following is correct:

1. She will have to file two ITRs, one in her personal name (Divya Mehra) and the second in her firm's name (Professional Consultancy).
2. She will have to file only one ITR, i.e., in her firm's name - Professional Consultancy (no legal distinction between the owner and the business).

If point number 1 is correct, then she will have to file a NIL ITR in her personal name (no other source of income) and pay tax on her firm's ITR.

Looking forward to your support.

Thanks,
Miss Akansha.

Miss Akansha, it is not required to have two PANs. In the case of a proprietorship firm, the firm and the proprietor are one and the same. The firm doesn't have any other separate entity. Also, as per the provisions of the Income Tax Act, there is no provision for bearing more than one PAN in the case of a proprietorship firm. If you want to file a return for income tax, you would have to file it in your name and not in your firm's name.