Income Tax Return Filling
for LLP

Introduction

LLP and Partnership Firm are both the types of business formations through which Partnership business can be done.

LLP is a newly established concept introduced in India by Limited Liability Partnership Act, 2008.

Under the partnership, each partner owns a share of the business. This is a business structure which is less expensive and it is even more customizable than a corporation while Limited Liability Partnership has the advantages of both Partnership and LLP as it has the limited liability of the Partners.

Difference between Partnership and LLP

PARTICULARSLIMITED LIABILITY PARTNERSHIPPARTNERSHIP
GOVERNED BY:It is registered under LLP Act,  2008It is registered under  Partnership Act, 1932
TIME OF REGISTRATION5-7 days7-10 days in complete process
LIABILITY.Unlimited. Partners are severally and jointly liable for actions of other partners and the firm and liability extend to their personal assets.Limited, to the extent their contribution towards LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner.
TAX LIABILITY30%+ Health and education cess30%+ health and education cess
PRINCIPAL/AGENT RELATIONSHIPPartners are agents of the firm and other partners.Partners act as agents of LLP and not of the other partners.
DIRECTOR IDENTIFICATION NO./ DESIGNATED PARTNER IDENTIFICATION NO.The partners are not required to obtain any identification numberEach Designated Partners is required to have a DPIN before being appointed as Designated Partner of LLP.
DIGITAL SIGNATUREThere is no requirement of obtaining Digital SignatureAs eforms are filled electronically, atleast one Designated Partner should have Digital Signatures.
ANNUAL FILINGNo return is required to be filed with Registrar of FirmsAnnual Statement of accounts and Solvency & Annual Return is required to be filed with Registrar of Companies every year.
AUDIT OF ACCOUNTSPartnership firms are only required to have tax audit of their accounts as per the provisions of the Income Tax ActAll LLP except for those having turnover less than Rs.40 Lacs or Rs.25 Lacs contribution in any financial year are required to get their accounts audited annually as per the provisions of LLP Act 2008.
CREDIT WORTHINESS OF ORGANIZATIONCreditworthiness of firm depends upon goodwill and creditworthiness of its partnersWill enjoy Comparatively higher creditworthiness from Partnership due to Stringent regulatory framework but lesser than a company.
NUMBER OF MEMBERSMinimum 2 and Maximum 20Minimum 2 partners and there is no limitation of maximum number of partners.
REGISTRATIONRegistration  is optionalRegistration with Registrar of LLP required.

Advantages of Income Tax Filing for LLP

Easy loan processing

Income Tax return filling helps Partnership firm or business in taking loan from various Financial Institutions. Most of the banks and NBFCs ask for ITR receipts from business for latest three year when a business applies for a high-value loan like business long term loan or working capital loan. Lenders consider ITR as the most authentic document supporting business turnover and income. Hence, you should regularly file income tax return if you want to take loan in the future.

Allow carry forward losses

Income Tax return filling helps in carry forward the losses occur in previous year from the current year Income. Most businesses face losses in the initial years of the business. The business loss or capital losses can be carried forward up to 8 years if the ITR is filed. But if ITR is not filed, the taxpayer is deprived of this benefit.



Define net worth

The ITR filed with the Government defines the financial worth of the business. Return filling help in tracking the net worth of an entity it shows business turnover its assets and income the track of ITR shows the financial capacity and also increases the capital base of a person.



 

ITR FORM

ITR-5: Income tax return 5 is for

Partnership firms

AOPs (Association of persons)

BOIs (Body of Individuals)

Artificial Juridical Person (AJP)

Estate of deceased

Estate of insolvent

Business trust and investment fund.

Documents Required

Pan Card and Aadhaar card of the partners

Pan card of firm

Books of Accounts | Financial Statement (Profit or loss Statement and Balance sheet)

Procedure for Income Tax Filing for LLP

1. Complete the Questionnaire
We will provide a questionnaire which is required to be filled by you in which we will sought the basic details and documents pertaining to the Filing of ITR of the partnership firm

2. Review of the documents
All the documents provided to us and the questionnaire will help us to process further for preparation of books of accounts of the partnership firm

3. Filing of Income Tax Return
We will file further send you the provisional statements for your verification and will file your income tax return before the due date and protect you from any penalty after its duly signed by you.

4. Acknowledgement
The next step is to check the name availability. The name should be unique in nature and should not be similar to name of any other entity registered. It may take at least 1-2 days.

Additional Information

Mandatory Compliances for an LLP

Registered LLPs  with the Ministry of Corporate Affairs (MCA) needs to file the following mandatory compliance requirements :

  1. Filing of Annual Return – LLP Form-11
  2. Filing Statement of Account & Solvency – LLP Form-8
    (Statement of Statement of the Accounts/Financial Statements)
  3. Filing of Income Tax Returns

Filing LLP Annual Return

Annual Return or Form 11 is a summary of an LLP’s Partners and indication of change in the management.

Every LLP is required to file Annual Return in Form 11 to the Registrar within 60 days of closer of financial year i.e. has to be filed on or before 30th May every year.

Filing of Statement of Account & Solvency

(Filing of Annual Accounts/ Statement of Accounts/ Financial Statements/ P&L & Balance Sheet)

  1. LLP must maintain proper books of account. The accounts may be on cash basis or accrual basis.
  2. Statement of Solvency (Accounts) needs to be prepared every year ending on 31st March.
  3. LLP Form – 8 should be filed with the Registrar of Companies on or before 30th October every year.
  4. It should be noted that LLPs / FLLPs whose annual turnover exceeds Rs. 40 lakh or partner’s obligation of contribution exceeds Rs. 25 lakh are required to get their accounts audited by auditor of the LLP/ FLLP mandatorily.

Filing of Income Tax Return

LLP can file its return of income in ITR 5. it is mandatory for LLP to file return of income electronically under digital signature if its accounts are required to be audited under section 44AB.

Sl. No.Income Tax Return ParticularsDue Date

 

1.

In case Audit is not required

(Those LLPs whose annual turnover does not exceeds Rs. 40 lakh or partner’s obligation of contribution exceeds Rs. 25 lakh are required to file their Income Tax. They are not required to get their accounts audited by their Auditor)

 

31st July of every year

 

2.

In Case Audit is required

(Those LLPs whose annual turnover exceeds Rs. 40 lakh or partner’s obligation of contribution exceeds Rs. 25 lakh are required to file their Income Tax. They are required to get their books audited under the Income Tax Act.)

 

30th September of every year

 

3.

LLPs Involved in International Transaction

(LLPs that entered into an international transaction with associated enterprises or undertook certain Specified Domestic Transactions are required to file Form 3CEB. Form 3CEB must be certified by a Chartered Accountant.)

 

30th November of every year

Tax Rate Applicable

Partnership Firms Income chargeable to tax at the rate of 30%

  • Surcharge

12% of Tax when income exceeds Rs 1crore

Related Posts

FAQ's on ITR Filing for LLP

Can an existing partnership firm be converted to LLP?

Yes, an existing partnership firm can be converted into LLP by complying with the Provisions of clause 58 and Schedule II of the LLP Act.

ROC – Filings: Form 17 needs to be filed along with Form 2 for such conversion and incorporation of LLP.

Can an existing company be converted to LLP?

No, only private / unlisted public company can be converted into LLP.

Is it mandatory to file the charge details to the registrar office?

it is not mandatory to file the charge details with the office of Registrar but the stakeholders can voluntarily file the same.

ROC – Filing: The charge details i.e. creation, modification or satisfaction of charge, can be filed through Appendix to e-Form 8 (Interim).

Can an existing company be converted to LLP?

Yes, any existing private company or existing unlisted public company can be converted into LLP by complying with the Provisions of clause 58 and Schedule III and IV of the LLP Act.

ROC- Filings: Form 18 needs to be filed with the registrar along with   Form 2 for such conversion.

Financial Year of LLP

Every LLP has to maintain uniform financial year (April to March) ending on 31st March of a year