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Partnership Tax Return Filing
Partnership Tax Return Filing
Running a Partnership Firm in India entails a wide range of financial and legal obligations. It is essential to comply with various tax and regulatory requirements to ensure the smooth functioning and growth of the business. These obligations include the submission of Income Tax Returns, TDS Returns, GST Returns, EPF Returns, and in certain cases, undergoing a Tax Audit.
Filing tax returns is one of the fundamental responsibilities of Partnership Firms in India. At Allycon, we understand the significance of adhering to Indian tax laws and the benefits that come with full compliance. Our services are designed to help business owners navigate the complexities of compliance, streamlining the process and reducing administrative burdens.
By working with Allycon, you ensure compliance with income tax regulations for partnership firms while exploring opportunities to maximize tax benefits, supporting your business’s long-term growth while staying fully compliant with tax obligations.
Partnership Firm
A partnership firm is a business entity formed by two or more individuals under a single enterprise. Partnership firms can be categorized into two types:
- Registered Partnership Firm: This type of firm is formally registered with the Registrar of Companies (RoC) and has a registration certificate as proof of its legal status.
- Unregistered Partnership Firm: A partnership that is not registered with the Registrar of Firms and lacks a registration certificate is considered unregistered.
Partnerships are based on agreements where the partners mutually agree to share profits and losses of the business. The individuals involved are known as partners, and together they form the firm. The taxation of partnership firms includes the distribution of profits among the partners, and partners are responsible for maintaining accurate financial records, fair dealings, and full transparency.
Income Tax Return filing for Partnership Firm
All partnership firms in India, regardless of whether they have earned income or incurred losses during a financial year, are required to file annual income tax returns. Understanding the partnership firm tax rate, which stands at 30%, is crucial for making well-informed financial decisions. Even in cases of zero income (NIL), the firm must file an income tax return within the stipulated due date.
Partnership Firm Tax slabs / LLP for AY 2023-24
| Tax Component | Rate / Description |
|---|---|
| Tax Rate | 30% on taxable income |
| Surcharge | 12% if taxable income exceeds ₹1 crore |
| Interest on Capital Deduction | Up to 12% on interest paid on capital |
| Health and Education Cess | 4% on total tax amount, including surcharges |
| Marginal Relief | Ensures the amount payable doesn’t exceed tax on total income by more than the excess income over ₹1 crore |
Minimum Alternate Tax for Partnership Firms
Just like companies, partnership firms are also subject to Minimum Alternate Tax (MAT). A MAT of 18.5% on the adjusted total income applies. The firm’s income tax liability cannot be lower than this rate (including surcharge, education cess, and other applicable cesses).
Deductions Allowed
When calculating the income tax liability for a partnership firm, the following deductions are allowed:
| Deductions Permitted | Description |
|---|---|
| Remunerations and interest paid to partners | Must conform to the partnership agreement |
| Salaries, bonuses, and commissions paid to non-working partners | Not allowed as deductions |
| Pre-dated transactions as per partnership deed | Remuneration must align with the partnership deed terms |
ITR Forms for a Partnership Firm
Partnership firms can file their Income Tax Returns (ITR) through the following forms, depending on their financial situation:
| Form | Description |
|---|---|
| ITR-4 | For firms with a total income up to ₹50 lakh, under presumptive taxation |
| ITR-5 | For firms required to undergo a tax audit |
Deadline for Partnership Firm Tax Filing
The deadline for filing ITR depends on whether the firm is required to undergo an audit:
| Scenario | Deadline |
|---|---|
| No audit required | 31st July |
| Audit required | 31st October |
Filing of GST Returns
Any partnership firm registered under GST, with an annual turnover exceeding ₹20 lakhs, must file the following GST returns:
| GST Form | Description |
|---|---|
| GSTR-1 | Outward supplies of goods and services |
| GSTR-3B | Monthly summary of sales and purchases |
| GSTR-9 | Annual return for regular GST payers |
| GSTR-4 | For firms under the composition scheme |
TDS Return
Partnership firms with a valid TAN (Tax Deduction and Collection Account Number) must file TDS returns based on the purpose of tax deduction. Common forms include:
| TDS Form | Purpose |
|---|---|
| 24Q | TDS on salary payments |
| 27Q | TDS for non-resident payments |
| 26QB | TDS on property transfers |
| 26Q | TDS for other payments |
EPF Return filing
If a partnership firm employs more than 10 individuals, EPF registration and filing of EPF returns become mandatory to comply with employee provident fund regulations.
Accounting and bookkeeping
Partnership firms must maintain detailed accounts if their annual turnover or gross receipts exceed ₹25,00,000 or if their income is more than ₹2,50,000 in any of the three preceding financial years.
Tax Audit
Partnership firms are required to undergo a tax audit if their sales, turnover, or gross receipts exceed ₹1 crore in a financial year. Firms may also be required to conduct an audit in other specific circumstances.
Streamline Partnership Firm Compliance with Allycon
With Allycon, you can manage your firm’s compliance with ease. Our team is dedicated to ensuring you meet all deadlines and tax regulations while helping you optimize financial outcomes.
Our services cover key compliance areas:
- Income Tax Return Filing: Ensure timely and accurate filing of ITRs.
- TDS Return Filing: Assist in filing TDS returns for various transactions.
- GST Return Filing: Provide solutions for regular or composition scheme GST filings.
- EPF Return Filing: Help ensure compliance with EPF regulations.
Partner with Allycon to keep your partnership firm’s finances and compliance on the right track, so you can focus on growing your business without the worry of penalties or missed deadlines.
Related Business Registrations
In addition to registration or incorporation, a business may require other registrations depending on the business activity undertaken. Talk to an Advisor to find out registrations your business may require post registration.
