ITR-5 Return Filing

Q: What is the tax rate applicable to partnership firms and LLPs?

Flat 30% on total income plus surcharge and cess. No slab rates or basic exemption for firms and LLPs. AMT under Section 115JC applies to LLPs at 18.5% of adjusted total income where regular tax is lower.

Q: What is Section 40(b) and why is it important for partnership firms?

Section 40(b) limits deductible partner payments: interest up to 12% pa; salary/remuneration at 90% of book profit up to ₹3 lakh, 60% above that, minimum ₹1,50,000 where book profit is nil. Excess is disallowed.

Q: Is an LLP treated differently from a firm for income tax purposes?

Both taxed at 30% flat; both subject to Section 40(b) limits. Key difference: LLPs are subject to AMT under Section 115JC; traditional partnership firms are not.

Q: Can a cooperative society file ITR-5?

Yes. Cooperative societies file ITR-5 and may claim deductions under Section 80P for income from banking, cottage industries, and member produce marketing. Not available to cooperative banks with paid-up capital above ₹20 lakh.

Q: What is the due date for ITR-5 filing?

31 July for non-audit cases; 31 October for tax audit cases (turnover above ₹1 crore); 30 November for transfer pricing cases. Late filing attracts fees and interest on outstanding tax.

Income Tax Return for Firms, LLPs, AOPs, BOIs, and Other Non-Corporate, Non-Individual Entities

ITR-5 is the income tax return form for entities that are neither individuals/HUFs nor companies — specifically partnership firms, Limited Liability Partnerships (LLPs), Association of Persons (AOPs), Body of Individuals (BOIs), artificial juridical persons, cooperative societies, local authorities, and estate of deceased or insolvent persons. It is a comprehensive form requiring full profit and loss accounts and balance sheets.

For most firms and LLPs, ITR-5 filing is linked with the tax audit under Section 44AB (where applicable) and the payment of advance tax. Partners' remuneration and interest must be within the limits of Section 40(b) to be deductible. Our ITR-5 filing service covers the complete cycle from income computation to e-filing. For companies, see our ITR-6 filing service, and for a full overview visit our income tax e-filing overview.

Our ITR-5 Filing Services

Firm Income Computation

Computing the firm's total income — business profits, capital gains, and other income — after allowing deductible partner remuneration and interest within the limits of Section 40(b).

Section 40(b) Compliance

Verifying that salary and interest paid to partners are within the deductible limits under Section 40(b) — computed on book profit — and preparing the required calculation for the ITR-5 schedule.

Balance Sheet & P&L Preparation

Preparation of the firm's profit and loss account and balance sheet as required in ITR-5, including capital accounts of each partner and the firm's fixed assets and current assets.

LLP Tax Return Filing

Filing ITR-5 for Limited Liability Partnerships — including income from business or profession, capital gains, and other sources, with correct treatment of partner remuneration under LLP agreement.

Tax Audit Coordination

Coordinating with the tax auditor for Form 3CA/3CB and Form 3CD filing where the firm's or LLP's turnover exceeds the prescribed threshold under Section 44AB.

Advance Tax & TDS Reconciliation

Computing and verifying advance tax payments, self-assessment tax, and TDS credits for the firm or LLP — reconciling against Form 26AS to ensure accurate tax liability calculation.

Who Must File ITR-5?

Partnership firms — whether registered or unregistered under the Indian Partnership Act
Limited Liability Partnerships (LLPs) registered under the LLP Act, 2008
Association of Persons (AOPs) and Body of Individuals (BOIs)
Cooperative societies and local authorities
Estate of a deceased person or estate of an insolvent
Artificial juridical persons not covered by other ITR forms
Cannot be used by individuals, HUFs, companies (use ITR-6), or trusts/exempt entities filing under ITR-7

Frequently Asked Questions

What is the tax rate applicable to partnership firms and LLPs?

Partnership firms (both registered and unregistered) and LLPs are taxed at a flat rate of 30% on their total income, plus applicable surcharge and health and education cess. Unlike individuals, there are no slab rates or basic exemption limits for firms and LLPs. Alternative Minimum Tax (AMT) under Section 115JC applies to LLPs at 18.5% of adjusted total income where regular tax is lower than the AMT amount.

What is Section 40(b) and why is it important for partnership firms?

Section 40(b) limits the amount of salary, bonus, commission, and interest paid to partners that can be deducted in computing the firm's taxable income. Interest to partners is allowed up to 12% per annum. Salary and remuneration to working partners is allowed at: 90% of book profit (up to ₹3 lakh book profit), 60% of book profit (above ₹3 lakh), with a minimum of ₹1,50,000 where book profit is nil or negative. Payments above these limits are disallowed under Section 40(b).

Is an LLP treated differently from a firm for income tax purposes?

For income tax purposes, an LLP is treated similarly to a partnership firm — it is taxed at 30% flat rate and partners' remuneration is limited by Section 40(b). However, there are some differences: an LLP is subject to Alternative Minimum Tax (AMT) under Section 115JC, whereas a traditional partnership firm is not. An LLP is also a separate legal entity under the LLP Act and its compliance framework is distinct from traditional firms.

Can a cooperative society file ITR-5?

Yes. Cooperative societies file their income tax returns using ITR-5. Cooperative societies may be eligible for deductions under Section 80P, which exempts income from specified activities including banking, cottage industries, and marketing of produce grown by members. The deduction under Section 80P is available only to cooperative societies and is not available to cooperative banks with paid-up capital above ₹20 lakh.

What is the due date for ITR-5 filing?

For firms and LLPs not requiring a tax audit, the due date is 31 July of the assessment year. For those requiring a tax audit under Section 44AB (turnover above ₹1 crore for firms, ₹1 crore for LLPs), the due date is 31 October. For international transactions requiring a transfer pricing report, the due date is 30 November. Late filing attracts fees and interest on outstanding tax liability.

Partnership Firm & LLP Returns — Filed Right, Every Year

Expert ITR-5 preparation for firms, LLPs, AOPs, and cooperative societies.