TAXAJ

Income Tax Filing for LLP

As per Section 139(1) of Income Tax Act 1961 every LLP registered in India required to file income tax return. LLP partners are responsible for Annual income tax filing. Now as LLP partner you must be having questions as How to File Income Tax return of LLP ? What is procedure to File Income Tax Return of LLP ? Income Tax rate of LLP? In This article we discussing about procedure to filing income tax return.

ITR Form 5 is applicable for LLP Income Tax return filing. Every LLP Registered in India shall file annual tax return. ITR Form 5 can be downloaded from income tax website. Procedure to file income tax return of LLP is complete online. Authorized partner digital signature is required for Income Tax Filing. Below is procedure for LLP Tax return filing.

  1. Register LLP on Income Tax Site
  2. Prepare LLP Balance Sheet
  3. Prepare Profit & Loss statement
  4. Prepare income tax computation sheet of LLP
  5. Pay LLP Income Tax online
  6. Download Income Tax Form 5
  7. Fill LLP & Financial information
  8. Upload ITR With DSC of Partner
  9. E Verify Income Tax Return

LLP Annual Filing

In this video we shall be discussing LLP Annual Filing Form 11, Form 8 & ITR Explained | Annual Return & Compliance of LLP

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About This Plan

Prepare your business accounts and file returns with TAXAJ.

Created by potrace 1.15, written by Peter Selinger 2001-2017

Timeline

It usually takes 3 to 5 working days.

Buy Now
Services Covered
Who Should Buy
How It's Done
Documents Required
Services Covered

  • Account Summary - P&L and Balance Sheet (up to 250 entries per year)
  • Advance Tax Payment (4 nos.)
  • Expert Assisted Tax Filing for business and professionals
  • Tax Savings & Planning Advice
  • Documented follow up
  • Excludes the Tax audit Fees
Who Should Buy
  • LLP's requiring books of account & filing of Tax Return
How It's Done

    • Purchase of plan
    • Upload documents
    • Financial Statements Preparation
    • Review computation sheet
    • Return filed & acknowledgement generated
Documents Required
  • LLLP PAN , Address Details , Date of registration
  • Partner PAN , Aadhar & Address , Contact details
  • Purchase & Sales Book
  • General Ledger
  • Cash Book
  • Bank Book
  • Expenses Invoices , Bill , Vouchers etc.

What is a Business Tax Return?

A business tax return is basically an income tax return. The return is a statement of income and expenditure of the business. Also,  any tax to be paid on the profits made by you is declared in this return. The return also contains details of the assets and liabilities held by the business. Items like fixed assets, debtors and creditors of business, loans taken and loans were given are declared here.

What are the legal structures that one can use to run a small business in India?

Small businesses in India are usually run as either proprietorship concerns, partnership firms, or small companies. Proprietorship concerns are business run by individuals. Partnership firms are established under the Indian Partnership Act, 1932. Companies are incorporated under the Companies Act. A special kind of partnership, namely Limited Liability Partnership (LLP), can be incorporated through the Ministry of Corporate Affairs. Special tax provisions are available for small companies and small businesses.

What tax benefits are available to small companies?

The corporate tax rate for companies with turnover less than (or equal to) Rs. 250 Crores is 25%. The corporate tax rate is 30% for companies with turnover above Rs. 250 Crores.

Are the LLPs required to file Income Tax Returns?

As LLPs are a separate legal entity formed under the Limited Liability Partnership Act, 2008, they are required to file Income Tax Return every year by 31st July, if tax audit u/s 44AB of Income Tax Act 1961 is not required; by 30th September; if accounts are to be audited and by 30th November, if it has entered into International transactions and is required to file Form 3CEB.

Are LLPs required to get accounts audited?

If the turnover exceeds Rs 40 Lakhs or if the contribution exceeds Rs 25 Lakhs, accounts of LLPs are required to be audited.

Are the LLPs entering into international transactions, required to file Form 3CEB?

If an LLP has international transactions with Associated enterprises or has entered into Specified Domestic Transactions, Form 3CEB, certified by CA, is required to be filed.

Are the LLPs taxed as “Firm”?

In terms of section 184 of the IT Act, LLP is assessed as “Partnership Firm” if LLP is evidenced by instruments and shares of partners are stated therein. If provision of sec 184 are not complied with, LLPs will not be eligible for deduction of partner salary and interest on capital.

In what form is an LLP required to file its Income Tax Return?

It is to be filed in Form ITR 5. It can be filed online using digital signature of the Designated Partner (DP).

Are the LLPs required to pay advance tax?

Yes, if the amount of tax payable is more than Rs. 10,000/-. 


The due dates are as follows:

ON OR BEFOREUPTO
15th June15%
15th September45%
15th December75%
15th March100%

What is the Rate of tax on LLPs?

For AY 2019-20 flat rate of 30% is applicable on the total income plus Surcharge of 12% if income is greater than Rs 1 Cores. Health and Education cess is also applicable on the amount of income tax and surcharge. However, LLPs are subjected to Alternate Minimum Tax (AMT)  of 18.5% of adjusted total income (Sec 115JC). In case of conversion of a private company or unlisted public company into a limited liability partnership under the Limited Liability Partnership Act, 2008, the provisions of section 115JAA shall not apply to the successor LLP.

Are provisions of presumptive taxation applicable to LLPs?

No. Sec 44AD is not applicable to Resident LLPs.

What special provisions of IT Act are applicable to LLPs?

Subject to the conditions mentioned in Sec 80lAC, LLPs are allowed a deduction of 100% of profits and gains derived from “eligible business”.

Is capital gains taxable on transaction of transfer of asset or shares to LLP?

Subject to conditions in Sec 47, any transfer of a capital asset or intangible asset by a private company or unlisted public company to an LLP or any transfer of shares held in the company by a shareholder as a result of conversion of the company into an LLP, will not be treated as a “transfer”.

Who has to file a business tax return?

Filing of return mainly depends on the type of business structure. For example:

  • If you are a sole proprietor your business income and your other personal income like salary, income from house property and interest income have to be stated on the same return.sole proprietor your business income and your other personal income like salary, income from house property and interest income have to be stated on the same return.
  • If your total income before deductions is above the basic taxable limit you need to compulsorily file your income tax return irrespective of profit or loss in your business.
  • The basic taxable limit is Rs. 2.5 lakh. So, if your income before deductions is above Rs 2.5 lakh you need to file your business tax return.
  • For companies, firms and Limited Liability Partnership (LLP) a business tax return has to be filed irrespective of profit or loss. Even if there are no operations undertaken, a return has to be filed.Limited Liability Partnership (LLP) a business tax return has to be filed irrespective of profit or loss. Even if there are no operations undertaken, a return has to be filed.
  • Companies, firms, and LLPs are taxed at a rate of 30%.

Income Tax Audit

Every taxpayer whose turnover is above Rs. 1 Crore in case of businesses and Rs. 50 Lakh in case of professionals is required to get a tax audit done. The taxpayer has to appoint a Chartered Accountant to audit their accounts. 

Also, a tax audit is required if there has been a loss of your business and you want to carry forward the loss. A tax audit is necessary even when the profits declared by you is less than 8% (6% on Digital transactions) of the turnover in case of business and 50% of receipts in case of professionals.

Presumptive Taxation

Individuals, HUF, and Firms running businesses or providing services can offer their income to tax on a presumptive basis. Turnover up to which presumptive taxation is allowed for businesses is Rs. 2 Crore and for professionals is Rs. 50 Lakh. 

Minimum of 8% of the turnover has to be offered as income under presumptive basis for businesses.  For professionals, 50% of professional receipts have to be declared on the business tax return.

What are the due dates for filing of returns?

For the Individuals not liable to tax audit, the last date for the filing of the return is 31st August after the end of the financial year (Belated return can be filed up-to 31st March subject to penalty) For individuals liable to tax audit and all other assesses like company, LLP or partnership firm, the due date is 30th September after the end of the financial year. For the FY 2017-18, this due date has been extended from 30 September 2018 to 31 October 2018. 

The penalty for non-filing of returns- Any loss incurred during the year cannot be carried forward if the return is filed after the due date of filing income tax return. 

Also a fine of Rs. 5000 under the section 271F can be levied on the assessee.

The Requirement for Filing Business Tax Returns

Filing business tax returns will depend on the kind of business you are whether a proprietorship, partnership firm, limited liability partnership or a private limited company.

If you fulfil certain conditions, you have to maintain a book of accounts.

If as a business, you meet any of the following criteria, then maintaining the books of accounts is mandatory.

-Income is more the Rs. 1,20,000; or

-Total sales, turnover or gross receipts are more than Rs. 10,00,000,

In any of the three immediately preceding previous years.

As we will see, in case of certain businesses, you would also require an external tax audit. Plus you have to be aware of due dates of filing your returns.

Businesses need to use Sugam ITR-4 for Income Tax return if they have opted for the presumptive income scheme as per section 44AD and Section 44AE of the Income Tax Act. Any business that has a turnover of less than Rs 2 crore can opt to be taxed presumptively by the Income Tax Department. Such businesses must declare profits of 8 percent for non-digital transactions or 6 percent for digital transactions, whichever one applies to their case.

When adopting a presumptive taxation scheme businesses can declare income at a prescribed rate and, in turn, does not need to do the tedious job of maintaining accounts. However, only a resident partnership firm (not limited liability partnership firm) can adopt the presumptive taxation scheme.

Is any scheme for presumptive taxation available to small businesses?

An ‘eligible assessee’ with gross receipts of less than Rs. 2 Crs in a year can avail of the scheme of presumptive taxation in India. Under presumptive taxation, the eligible assessee does not have to maintain any books of accounts and has to declare 8% (or 6% if receipts are through electronic clearing system or bank draft) of its gross receipts as taxable income. This scheme’s intention is to give relief to small businesses from bookkeeping and auditing requirements. This scheme can be availed only by resident individuals (i.e. proprietorship concerns), resident HUF, and partnership firms (but not LLPs).

Conclusion

LLP income tax filing is applicable irrespective of LLP annual turnover. LLP tax filing due date depends on LLP annual turnover or partners capital contribution. Procedure to file LLP tax return is online. LLP partners are responsible for prepare & filing LLP tax return. Income tax rate of LLP is applicable at 30% and surcharge & education cess applicable. Income Tax filing procedure is same in case of foreign LLP.