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Whether you run a small general store, a retail outlet, or a wholesale business, disclosing your income and maintaining proper records helps avoid tax notices and penalties. Filing ITR also makes it easier to apply for loans, licenses, and GST registration. In this guide, we will explain the process, applicable ITR forms, benefits and common mistakes shopkeepers should avoid while filing their returns.
Latest updates
- ITR filing Due date for FY 2024-25 (2025-26) has been extended from 31st July 2025 to 15th September 2025
Taxability of Income for Shopkeepers
Income earned by shopkeepers from selling goods or providing retail services is taxed under the head Profits and Gains from Business or Profession. This includes all income from daily sales, commissions, or any side business related to the shop. If the total income exceeds the basic exemption limit (Rs. 2.5 lakh for individuals below 60), filing of Income Tax Return becomes mandatory.
Presumptive Taxation Scheme under Section 44AD for shopkeepers
Shopkeepers with a turnover up to Rs. 2 crore can choose the presumptive taxation scheme under Section 44AD, which simplifies compliance. Under this scheme, 8 percent of the total turnover (or 6 percent for digital receipts) is considered as income, and no books of accounts or audit are required. Tax is calculated on the presumptive income and is paid as per the slab rates applicable to individuals.
If the shopkeeper does not opt for Section 44AD or if turnover exceeds Rs. 2 crore, they must maintain regular books of accounts and file ITR based on actual profit. Deductions like rent, electricity, staff salary, depreciation, and other business expenses can be claimed. In case TDS is deducted or GST is applicable, it is important to reconcile the data and file the correct return to avoid notices and mismatches.
What are Deductions and exemptions available to Shopkeepers?
Deduction under Section 80C for investments in LIC, PPF, NSC, ELSS, etc. (up to Rs. 1.5 lakh)
Deduction under Section 80D for medical insurance premium paid for self and family
Deduction under Section 80G for donations made to eligible charitable institutions
Deduction under Section 80TTA for savings bank interest (up to Rs. 10,000)
Depreciation on shop assets like furniture, machinery, computers under Section 32
Business expenses like rent, electricity, salaries, telephone bills, stationery, etc.
Interest on business loans and overdrafts
Repairs and maintenance expenses of the shop
Deduction under Section 24(b) for interest on business property loan (if any)
Carry forward and set-off of business losses from previous years
Income tax Slab rates for shopkeeper
Old tax Regime
| Income | Tax rates |
| Upto ₹ 2.50 lakh | 0% |
| ₹ 2.50 lakh – ₹ 5 lakh | 5% |
| ₹ 5 lakh – ₹ 10 lakh | 20% |
| Above ₹ 10 lakh | 30% |
You Can claim deduction under Section 80C, 80D, 80G, etc
For senior citizen (age between 60 & 80 years), tax rate is 0% upto ₹ 3 lakhs. Rest of the rates are same.
For super senior citizen (age above 80 years), tax rate is 0% upto ₹ 5 lakhs. Rest of the rates are same.
In Old tax regime, a maximum tax rebate under section 87A of Rs. 12,500 is available for income upto Rs. 5 lakhs meaning your income is totally tax free till Rs. 5 lakhs. The rebate under section 87A is not allowed to a Non-resident.
New tax Regime (FY 23-24)
| Income | Tax rates |
| Upto ₹ 3 lakh | 0% |
| ₹ 3 lakh – ₹ 6 lakh | 5% |
| ₹ 6 lakh – ₹ 9 lakh | 10% |
| ₹ 9 lakh – ₹ 12 lakh | 15% |
| ₹ 12 lakh – ₹ 15 lakh | 20% |
| More than ₹ 15 lakh | 30% |
New tax Regime (FY 24-25)
Income | Tax Rate |
Upto ₹ 3 lakh | 0% |
₹ 3 lakh – ₹ 7 lakh | 5% |
₹ 7 lakh – ₹ 10 lakh | 10% |
₹ 10 lakh – ₹ 12 lakh | 15% |
₹ 12 lakh – ₹ 15 lakh | 20% |
Above ₹ 15 lakh | 30% |
New tax Regime (FY 25-26)
| Income Range (₹) | Tax Rate |
|---|---|
| Upto ₹ 4 lakh | Nil |
| ₹ 4 lakh – ₹ 8 lakh | 5% |
| ₹ 8 lakh – ₹ 12 lakh | 10% |
| ₹ 12 lakh – ₹ 16 lakh | 15% |
| ₹ 20 lakh – ₹ 20 lakh | 20% |
| ₹ 20 lakh – ₹ 24 lakh | 25% |
| Above ₹ 24 lakh | 30% |
Which ITR form is applicable for shopkeepers?
Shopkeepers can file ITR-4 if they opt for the presumptive taxation scheme under Section 44AD. ITR-4 is a simplified return suitable for small business owners who do not wish to maintain detailed books of accounts.
If the shopkeeper does not opt for presumptive taxation or has a turnover above Rs. 2 crore, then ITR-3 will be applicable. In such cases, actual income and expenses must be reported, and maintaining books of accounts is mandatory.
Benefits of ITR Filing for Shopkeepers
Helps avoid penalties and ensures compliance with income tax laws
Builds financial credibility for home loan, personal loan, business loan, credit card and term insurance
Useful for visa processing and financial background checks
Enables refund claim in case of excess TDS deduction
Serves as income proof for applying for tenders, licenses or government schemes
Makes it easier to carry forward and set off business losses
Acts as proof of income in case of scrutiny or income tax notice
Supports eligibility for various subsidy and loan schemes for small businesses
Documents Required for ITR filing for shopkeepers
- PAN Card
- Bank statement/passbook
- Details of income like sales register, sales invoices
- Details of expense like purchase register, purchase bills, expense bills, etc
- Balance Sheet and Profit & loss A/c
- Form 26AS and AIS
- Other relevant documents depending on other income sources
Process of ITR filing for shopkeepers
1. Login to Income Tax Portal
Visit www.incometax.gov.in/iec/foportal/ and log in using your PAN (as user ID), and password.
2. Select ‘File Income Tax Return’
On the dashboard, click on e-File > Income Tax Return > File Income Tax Return.
3. Choose the Assessment Year and Mode
Select the relevant Assessment Year (e.g., 2024-25 for FY 2023-24) and choose the mode of filing as Online.
4. Choose the Status
Select your status as Individual.
5. Select the Applicable ITR Form
ITR-4 if you are opting for the presumptive scheme (Section 44AD)
ITR-3 if you are reporting actual income with books of accounts
6. Reason for Filing Return
Select the reason such as income above basic exemption limit or claiming refund or as per 7th proviso to Section 139(1).
7. Fill in the Required Details
Personal information (auto-filled)
Bank details (ensure correct account for refund)
Income details from business
Tax paid details including advance tax and TDS
8. Validate and Preview
Carefully review all entries, click Preview Return, and ensure accuracy.
9. Submit the Return
Click Submit and proceed to e-verify using Aadhaar OTP, net banking, or EVC.
10. Download Acknowledgement
Once submitted and verified, download ITR-V (Acknowledgement) for your records.
For shopkeepers not maintaining books, ITR-4 is the easiest route if they meet the turnover and income criteria.
What is the Due date of ITR filing for shopkeepers?
The Due date to file Income tax return for FY 2024-2025 (AY 2025-2026) is 31st July,2025 which is extended to 15 th September, 2025.
In case you miss this deadline then you can file belated ITR till 31st December, 2025 with late fees.
Also for any mistake made while filing ITR before due date, you can make corrections by filing Revised ITR any number of times till 31st December, 2025
If you miss deadline of Belated income tax return filing then you can file Updated ITR (ITR U) till 4 years from the end of relevant assessment year with late fees and additional taxes.
What are the Consequences of non-payment of Tax and non-filing of ITR by shopkeepers?
Failing to pay taxes and file your Income Tax Return (ITR) has severe consequences. Firstly, unreported income is deemed illegal, equating to tax evasion, and can result in a penalty of 100% to 300% of the evaded tax under Section 271(C). Secondly, a penalty ranging from 10% to 90% of the undisclosed amount may be imposed under Section 271AAB, depending on the circumstances. Lastly, if you miss the filing deadline, a 1% interest per month or part thereof will be charged on the unpaid tax amount as per Section 234A.
Looking for help?
If you are a shopkeeper looking for ITR filing, A R Dhorajiya is here to help. With practical experience in handling small business and presumptive taxation cases, we ensure your return is filed correctly and on time. From choosing the right ITR form to claiming eligible deductions and verifying your return, we take care of the entire process. Reach out today to get professional support and avoid last-minute stress or errors.
Contact us today at +91 9769647582 for a consultation or to get started with your ITR filing
Frequently Asked Questions
Yes, shopkeepers are required to pay income tax if their total income exceeds the basic exemption limit of Rs. 2.50 lakhs. Income from shopkeeping is treated as business income and taxed accordingly.
Yes, if the gross total income exceeds the basic exemption limit of Rs. 2.50 lakhs or if the business owner wants to claim a refund, carry forward losses, or has income from foreign assets, filing ITR is mandatory.
Yes, a shopkeeper is considered a self-employed individual running a business and is taxed under the head “Profits and Gains from Business or Profession.”
Small businesses with turnover up to Rs. 2 crore can opt for presumptive taxation under Section 44AD and pay tax on a deemed profit of 8 percent (or 6 percent for digital receipts), without maintaining detailed books of accounts.
Yes, if total income exceeds the basic exemption limit of Rs. 2.50 lakhs, ITR filing is mandatory even if there is no tax payable after deductions. Filing is also required to claim refunds or carry forward losses.
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RECOMMENDED
Recieved ITR Certification in less than 3 hours for a affordable cost.
Highly recommended.
With Warm Regards
Arvind Mishra
Many appreciations with thanks,
Dr.Gautam Makwana
Transparent communication,
Happy with the outcome.
Thank you!
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