Income tax returns for LLP

April 23, 2025 by Team Instabizfilings

Introduction to LLP and Income Tax Returns

The Limited Liability Partnership (LLP) organization brings together partnership functions together with corporate-level benefits. The partners in an LLP structure have restricted liability protection because their personal assets remain unaffected by the business liabilities.

To comply with tax legislation the income generated by LLP subject to Income Tax Act of 1961 and requires annual ITR filing according to the same procedure as companies and individuals. Tax laws compliance becomes possible through this method for figuring out taxable income amounts.

Taxation of LLPs

Each LLP operates as an independent entity when it comes to taxation regulations. An LLP has its own tax liability because it operates as an independent legal structure for financial purposes. Key points about LLP taxation:

An LLP functions as an independent taxable legal entity which must submit tax payments on its earned money.
An LLP pays taxes by giving 30% of its total net income to the governing authority before deducting long-term capital gain revenue. A surcharge alongside a cess payment will need to be made whenever the LLP generates income.
Profit-sharing income generated by partners in an LLP does not need taxation at the level of the partnership itself. Each partner pays their own individual tax on the profit amount they received from the business.

Filing Requirements for LLP

An LLP must file its Income Tax Return annually, even if there is no income.

Mandatory Filing: All LLP’s must file an income tax return, irrespective of whether they have income or not.
Form for Filing: LLP’s must use ITR-5 to file their returns. This form is specifically designed for entities like LLP’s, partnerships, and other similar business structures.

Deadlines for Filing ITR

The deadlines for filing income tax returns for an LLP depend on whether the LLP is required to undergo a tax audit:

Before September 30th of the assessment year Tax audit cases must submit their tax audit statements to the authorities.
Non-tax auditing cases must be submitted to the authorities by 31st July throughout the assessment year.

The deadline for filing LLP accounts extends to 30th September when an audit is performed on them. However, if there are any extensions announced by the Income Tax Department, the dates may change.

Documents Required for Filing ITR for LLP

To file the ITR, the LLP must ensure the following documents are in order:

The partnership deed specifies the partnership terms that identify the responsibilities of each member within their established partnership agreement.
The Profit and Loss Statement reveals all relevant revenue and expense data of the LLP.
The financial period conclusion statement of LLP shows its total assets together with liabilities and equity.
The tax audit report submission with the specified auditor report must accompany an LLP filing when tax audit requirements exist.
The documentation presents Bank Statements that serve to verify both earnings and outgoings.

Steps to File ITR for LLP

Filing an Income Tax Return for an LLP is a systematic process that includes the following steps:

Step 1: Gather the Required Documents As mentioned above, collect all necessary financial statements and documents. These will provide the necessary information for the ITR form.
Step 2: Choose the Correct ITR Form For an LLP, you need to file ITR-5, which is for firms, LLPs, and similar entities.
Step 3: Fill in the Details Fill out the ITR-5 form with the required details:

Partnership Details: Name, PAN, and business information.
Income Details: Report the income generated from business operations.
Tax Computation: Calculate the total income and taxes payable.
Profit & Loss Summary: Input the financial summary of the business.

Step 4: Tax Audit Report (if applicable) If the LLP has a turnover above the prescribed limit, you need to have the accounts audited by a chartered accountant. Tax auditor reports need to be submitted through specific structures when file Income Tax Returns.
Step 5: E-Filing of the Return Once the form is correctly filled out and checked for errors, it can be submitted online through the Income Tax e-filing portal. Ensure that the digital signature of the authorized person is attached for verification purposes.
Step 6: The verification of a filed return becomes necessary after users submit their forms through the online platform. Verification can be done either:

Electronically, using an Aadhaar OTP, Net banking, or Digital Signature Certificate (DSC).
Physically, by sending a signed ITR-V form to the CPC, Bangalore, within 120 days of filing the return.

Penalties for Non-Filing or Late Filing

The penalty system of the Revenue Department imposes financial consequences on people who submit their ITRs late or not at all.

The due date delay in return submission triggers a penalty fee of between ₹1,000 to ₹10,000 which depends on the late filing interval.
The late payment of taxes under Section 234A will trigger interest charges on the tax payable amount.
Due date for LLP’s with tax audit is 31st July of the assessment year
Due date for LLP’s without tax audit is 31st October of the assessment year

Tax Audit for LLP

If the LLP’s turnover exceeds ₹1 crore in a financial year, the LLP is required to undergo a tax audit as per the Income Tax Act. A tax audit is conducted by a qualified Chartered Accountant (CA) to ensure that the books of accounts are accurate and compliant with tax laws.

The filing deadline for audit returns takes place during 30th September of the assessment year.

Tax Planning and Deductions for LLP

LLP’s can also benefit from various tax deductions under the Income Tax Act, which can help reduce their tax liability. Some key provisions include:

Deductions for investments in instruments like PPF, EPF, life insurance premiums, etc.
An individual can receive deductions under Section 80D by paying premiums toward health insurance policies.
The LLP profits from depreciation benefits obtained by claiming reductions for business assets.

Conclusion

The business's compliance with Indian tax laws depends on proper income tax returns submission for LLPs. It is possible to simplify the filing process of income tax returns for an LLP when you know the required documentation with their specified deadlines and necessary forms. A qualified tax professional serving as well as a chartered accountant should be consulted to guarantee accurate and timely tax filings for your LLP.

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