May 18, 2022
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.
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.
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.
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.
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.
If the turnover exceeds Rs 40 Lakhs or if the contribution exceeds Rs 25 Lakhs, accounts of LLPs are required to be audited.
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.
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.
It is to be filed in Form ITR 5. It can be filed online using digital signature of the Designated Partner (DP).
The due dates are as follows:
ON OR BEFORE | UPTO |
15th June | 15% |
15th September | 45% |
15th December | 75% |
15th March | 100% |
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.
No. Sec 44AD is not applicable to Resident LLPs.
Subject to the conditions mentioned in Sec 80lAC, LLPs are allowed a deduction of 100% of profits and gains derived from “eligible business”.
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”.
Filing of return mainly depends on the type of business structure. For example:
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.
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.
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.
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.
-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.
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).
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.
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