LLP Income Tax Return Filing (ITR-5)

An LLP is taxed at a flat rate of 30 percent on its net taxable income under the Income Tax Act, 1961. A surcharge of 12 percent applies where total income exceeds one crore rupees. A health and education cess of 4 percent is levied on the tax and surcharge. Unlike domestic companies, an LLP is not subject to Minimum Alternate Tax under Section 115JB or Alternate Minimum Tax provisions under Section 115JC, as those provisions do not apply to LLPs.

Yes. The Income Tax Act requires that ITR-5 filed by an LLP must be verified using a digital signature certificate of the designated partner. Unlike individual taxpayers who can use Aadhaar OTP or net banking EVC, LLPs do not have the option of electronic verification through those methods. The designated partner must have a valid Class-3 DSC registered on the income tax portal. Filing without a valid DSC is not permitted, and the return will not be accepted.

Under Section 40(b) of the Income Tax Act, partner remuneration is deductible only if authorised by the LLP Agreement and within the prescribed limits. For the first three lakh rupees of book profit or in case of a loss, the limit is three lakh rupees or 90 percent of book profit, whichever is higher. For the balance book profit beyond three lakh rupees, the deductible limit is 60 percent. Remuneration paid in excess of these limits is disallowed and added back to the LLP's taxable income.

No. The share of profit received by a partner from an LLP is exempt from tax in the partner's hands under Section 10(2A) of the Income Tax Act, provided the LLP has paid tax on that profit at the entity level. However, remuneration and interest received by partners from the LLP are not exempt — they are taxable as income from business or profession in the partner's individual ITR under Section 28 and must be disclosed accordingly.

For LLPs not required to get accounts audited, the due date for filing ITR-5 is 31 July of the assessment year. For LLPs subject to tax audit under Section 44AB, the due date is 31 October of the assessment year. Where the LLP has international transactions that require a transfer pricing accountant's report under Section 92E, the due date is 30 November. The Central Board of Direct Taxes may extend these dates by official notification, as has happened in several recent years.

An LLP is required to get its accounts audited under Section 44AB of the Income Tax Act if its total sales, turnover, or gross receipts from business exceed one crore rupees in the financial year. For professional LLPs, the threshold is fifty lakh rupees of gross receipts. The audit must be conducted by a chartered accountant, and the audit report must be filed in Form 3CB along with Form 3CD on the income tax portal before the ITR-5 is submitted.

The Income Tax Department matches the turnover reported in ITR-5 with the GST returns filed by the LLP. Differences arise because of exempt supplies, advance receipts treated differently under GST and income tax, credit notes, and the treatment of job work. A reconciliation statement must be prepared before filing ITR-5 that explains each difference between GSTR-1 aggregate supplies and the income declared in the return. The Annual Information Statement on the portal now displays GST-reported turnover, making reconciliation essential.

No. Section 80 of the Income Tax Act provides that losses under most heads — including business and profession losses and capital gains losses — can be carried forward only if the return is filed on or before the due date under Section 139(1). Filing after the due date results in the loss of the carry-forward benefit for the current year. Unabsorbed depreciation under Section 32(2) is an exception and can be carried forward even if the return is filed late.

An LLP must file Form 11 (Annual Return) with the Registrar of Companies within 60 days of the close of each financial year, that is, by 30 May. Form 8 (Statement of Account and Solvency), which includes the balance sheet and profit and loss account, must be filed by 30 October. These MCA filings use the audited financials, and it is advisable to complete the tax audit and ITR-5 in coordination with these filings to ensure consistency across all regulatory submissions.