Income Tax Return For Partnership Firm

Introduction

Running a partnership firm in India involves many significant financial and legal obligations. One among them is filing income tax returns for partnership firms. Following all applicable tax and regulatory standards is essential to your company’s successful operation and expansion. 

These responsibilities include filing TDS, GST, EPF, and income tax returns for partnership firms and occasionally participating in a tax audit.

Income Tax Return For Partnership Firm

Partnership firms and limited liability partnerships (LLPs) are subject to an even 30% income tax on their net profit. This calculation does not consider the income tax slab rates, as they only apply to individuals and HUF.

Payment of the 2% education cess and the 1% secondary higher education cess (SHEC) is also required. If a partnership firm’s income exceeds one crore during a fiscal year, a 12.5% surcharge becomes due. 

The 18.5% alternative minimum tax will be paid as “adjusted total revenue.” A partnership firm is subject to a flat 30% income tax rate. (Surcharge is applied to the tax that is due, not to the total amount of income.)

If a partnership firm makes money by selling an asset, Section 112 of the tax code applies to its income. 

If shares or mutual funds are sold before the holding period of one year has elapsed, the partnership firm’s income tax will be subject to a 15% flat rate under Section 111A. Taxes are not applied if the holding period exceeds one year.

The procedure for filing income tax returns for partnership firm

Form ITR-5, utilized for the partnership firm and not for the partners personally, should be used to file the income tax for the partnership firm. It does not require any declarations or supporting documentation, as shown in the previous ITR-5 form situations.

Maintaining a record of all business transactions is essential for submitting them to the tax authorities. Partnership businesses’ income tax is not distinct from that of their partners. The documents must be submitted to process the partnership firm’s income tax. 

The Income Tax Department accepts online filing of ITR-5. Each partner must possess a digital signature certificate to authenticate the partnership tax return submissions. 

Legal consulting services make people more aware of the terminology and the taxes paid, making the procedure easier.

The deadline for filing partnership firm taxes

Depending on whether an audit is necessary, a partnership firm’s ITR reporting deadline varies:

1. By July 31st, if the company is not audited, returns need to be submitted.
2. The firm has until October 31st to file its returns in case an audit is required.

Conclusion

Given the information above, any partnership firm must consider the tax process carefully. Partnership firms are subject to an even 30% income tax rate, including EC and SHEC, on firms and LLPs that have paid a surcharge. 

Proper filing of Income tax returns for partnership firms is essential to keeping the business running smoothly. Obtaining legal counsel before starting the process is strongly recommended to ensure that you fully comprehend the legislation.

Ready to file your Income Tax Return for Partnership Firm? Whether it’s ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, or ITR-7, we’ve got you covered! Need to respond to a tax notice or handle TDS filings? We can help with that, too. 

Lawgical Adda’s solution provides end-to-end corporate governance and secretarial compliance management, encompassing every phase of the entity life cycle. Don’t hesitate to contact us if you want more information on the compliance standards and to outsource them to us.