Partnership Firm / LLP ITR

Overview

Partnership Firms and LLPs file their annual income tax returns in Form ITR-5. Both are taxed at a flat rate of 30% on total income (plus applicable surcharge and 4% health & education cess). Tax audit under Section 44AB is mandatory for firms/LLPs with business turnover above Rs.1 crore (Rs.10 crore for highly digital businesses) or professional receipts above Rs.50 lakhs.

Key tax computation: Section 40(b) strictly limits the deduction for partner remuneration (capped at 90% of the first Rs.3 lakh of book profit + 60% of balance, or Rs.3 lakh whichever is higher) and partner interest (maximum 12% per annum). Remuneration and interest exceeding these limits are disallowed — excess goes to taxable income. LLPs additionally must file Form 8 (Statement of Accounts — due October 30) and Form 11 (Annual Return — due May 30) with MCA.

Due date: July 31 (no audit) | October 31 (with audit). MFiling professional charges: from Rs.2,999 (no audit) | Rs.5,999 (with audit).

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Frequently Asked Questions