ITR FOR BUSINESS INCOME
BASIC PLAN
ITR FOR PARTNERSHIP FIRM:
o Partnership firms are required to file Income Tax Returns every financial year.
o Partnership firms for filing income tax returns have to file form ITR 5.
o Tax Rates for Partnership Firm:
– Partnership firms are liable to pay income tax at the rate of 30% on the total annual income.
– Apart from this, if the total income exceeds Rs 1 crore, then the firm is also liable to pay a surcharge at the rate of 12%.
– The partnership firm must also pay education and secondary education cess in addition to income tax and surcharge.
– The education and secondary education cess is 2% and 1% respectively.
o Audit Requirement for Partnership Firm
– A partnership firm will require an audit if they fall under the following category:
– Carrying out a business and if total sales exceed Rs 1 crore in the previous year.
– Carrying on a profession and gross receipts in the profession exceed Rs 50 lakhs in any previous year.
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FILE ITR-5 FORM FOR:
» Partnership Firm/ LLP.
» Preparation of:
- Balance sheet.
- Profit and Loss statement.
» Income Tax Return Filing.
Rs 2,499/-
ITR FOR BUSINESS INCOME
STANDARD PLAN
FILE ITR-5 FORM FOR:
» Partnership Firm/ LLP.
» Preparation of:
- Balance sheet.
- Profit and Loss statement.
» Income Tax Return Filing.
Rs 4,999/-
ITR FOR BUSINESS INCOME
PREMIUM PLAN
FILE ITR-5 FORM FOR:
» Partnership Firm/ LLP.
» Preparation of:
- Balance sheet.
- Profit and Loss statement.
» Income Tax Return Filing.
Rs 7,499/-
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ITR FOR PARTNERSHIP FIRM
- PARTNERSHIP INDTROUCTION: Partnerships are ventures where two or more persons come together to undertake business activities, but this venture does not gain a different personality from its constituents.
- ITR FOR PARTNERSHIP FIRM: Partnership firms are required to file Income Tax Returns every financial year, for which the firm must maintain its book of accounts properly, and may have to go through an extensive tax audit, before the relevant Form ITR 5 is filled and filed.
- MANDATORY COMPLIANCES FOR ITR FOR PARTNERSHIP FIRM:
- A tax audit (required if sales turnover of a firm is over Rs 1 crore over a financial year, or in cases of professional firms if the total gross receipts are over Rs 50 Lakhs).
- Books of Accounts.
- TDS filings, if required.
- GST filings, if required.
TAX RATE FOR ITR FOR PARTNER
- TAX RATE FOR ITR FOR PARTNER:
- Partnership firm is required to file a partnership firm income tax return under the Income Tax Act,1961.
- Partnership firms are liable to pay income tax at the rate of 30% of total income.
- Besides, a partnership firm is liable to pay an income tax surcharge of 12% if the total income exceeds Rs.1 crores.
- Additional to the income tax and surcharge a partnership firm must pay the education cess and the secondary higher education cess.
- Education Cess is applicable on the amount of the income tax and the applicable surcharge at the rate of 2%.
- Secondary and higher education cess is applicable on the amount of the income tax and the applicable surcharge at the rate of 1%.
- Similar to a private limited company or LLP, partnership firms are also required to pay alternate minimum tax at the rate of 18.5% of “adjusted total income”.
- Alternate minimum tax would be increased by the applicable surcharge, education cess, and secondary and higher education cess.
HOW TO FILE ITR FOR PARTNERSHIP FIRM
- Partnership income tax return filing should be done through Form ITR-5.
- This form ITR-5 is used to partnership firm income tax returns and not the tax returns for the partners.
- Like all other income tax forms, ITR 5 is an attachment-less form and there is no requirement to submit any documents or statements along with the partnership firm tax returns.
- However, the taxpayers must save the records about business and produce the same before the tax authorities when requested.
- ITR-5 can be filed online with the income tax department’s online portal.
- The documents need to be submitted only when they are asked for.
- While filing the Partnership firm tax returns the partners must have class 2 digital signatures for verification of the filing process.
- Partnership income tax return filing should be done through Form ITR-5.
- This form ITR-5 is used to partnership firm income tax returns and not the tax returns for the partners.
- Like all other income tax forms, ITR 5 is an attachment-less form and there is no requirement to submit any documents or statements along with the partnership firm tax returns.
- However, the taxpayers must save the records about business and produce the same before the tax authorities when requested.
- ITR-5 can be filed online with the income tax department’s online portal.
- The documents need to be submitted only when they are asked for.
- While filing the Partnership firm tax returns the partners must have class 2 digital signatures for verification of the filing process.
AUDIT REQUIREMENT FOR ITR FOR PARTNERSHIP FIRM
- To get the accounts audited, partnership firms should satisfy following conditions:
- Carrying on business and total sales exceed Rs.1 crore in the previous year.
- Carrying on a profession and gross receipts in profession exceed Rs.50 lakhs in any previous year.
- Besides, there are other conditions applicable that could make an audit mandatory for a partnership firm.
- If a partnership firm entered into international transactions or specified domestic transactions a report must be furnished in Form No. 3CEB under section 92E.
FREQUENTLY ASKED QUESTION - FAQ.
Are Partnership firms are required to carry out Auditing?
- Partnership firms are not required to make an audited financial statement each year.
- The tax audit may be necessary based on the turnover and other criteria.
What are the Compliances for Partnership firms?
The compliance for partnership firms mainly includes the income tax return filing as well as the annual return filing.
What documents are required for Partnership firm return filing?
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What is the importance of a Partnership deed?
- The partnership deed contains all the Terms and conditions of the Partnership.
- It regulates the rights and the duties of each partner making the partnership deed a very crucial document.
Is a Partnership firm a separate legal entity?
- The partnership firm and the partners of this firm are considered to be the same.
- In the case of the partnership firms, the liability of the partners is also unlimited and all the partners are jointly responsible for the liabilities of the firm.
Is it necessary for the Partnership firm to file the income tax returns?
Irrespective of the turnover and the profit or losses made by the partners, the partnership is required to file income tax returns.
Can a Partnership deed be transferred?
- There are certain limitations on the transfer of ownership of a partnership.
- A partner cannot transfer the partnership without the consent of all the partners.
Can a Partnership firm be converted into an LLP or a Company?
Yes, it is possible to convert a partnership firm into a company or an LLP. The process of conversion is very cumbersome. Hence, the entrepreneur should consider starting an LLP or a company instead of opting for a Partnership.
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