Company tax return for LLPs in India

Company Tax Return for LLPs in India

A limited liability partnership (LLP) is created in accordance with the Limited Liability Partnership Act of 2008. The individuals who are associated with it as its partners are not considered to be a part of it legally. The liability of the partners in an LLP is limited to the investment they have made in the LLP; the LLP is responsible for all of its assets. Because the partners' liabilities are limited to their agreed-upon participation in the LLP, the LLP's organizational form contains aspects of both a corporation structure and a partnership company structure. Additionally, a partner is not personally liable for any fraudulent acts


Benefits of Filing Income Tax Return of an LLP
1.  When compared to corporations, LLPs are charged less tax. It is one of their major tax advantages. LLPs are required to pay a flat 30% tax on their profits and are exempt from the surcharge and cess that apply to private limited companies.
  2.  LLPs can cut their tax burden and lower their taxable income. Other expenses incurred while conducting the business can also be claimed as operating expenses. This involves rent, salaries, utilities and other options.
  3.   Any fixed assets owned by the LLP including buildings, machinery, and equipment which is the non-cash expense can claim the depreciation while ITR filing for LLP.
  4.  The LLP registered and engaged under research and development activities are permitted to claim a deduction of up to 150% in their expenses. Charitable donations are also recognized under Section 80G of the Income Tax Act. This is also for the deductible. LLP's that are startups can claim deduction of up to 100% of the profits for the first 3 years.

Documents Required for LLP Income Tax Filing
1. Initial costs
2. TDS on LLP payments
3. Take into account the LLP provisions of the GST (if applicable)
4. Partners' compensation (Special Treatment).
5. Filing LLP Annual Return
In order to preserve compliance and keep away from severe legal repercussions for non-compliance, a Limited Liability Partnership (LLP) needs file returns on a regular basis. A limited liability partnership must conform to a very small number of compliances annually, especially when compared to the constraints placed on private limited corporations. Yet, it seems like the fines are quite substantial. A private limited company may only be fined ₹1 lakh for noncompliance, but an LLP may be fined ₹5 lakhs.
LLPs must file an income tax return using Form ITR 5. Form ITR 5 can be filed online through the income tax website using the digital signature of the designated partner. After filing an LLP tax return, the taxpayer should print two copies of Form ITR-V.
One copy of ITR-V, signed by the assesse should be sent by ordinary post to Post Bag No. 1, Electronic City Office, Bengaluru–560100 (Karnataka). The other copy can be retained by the assesse for his record

Due Dates for Form Filing Tax for LLP
Every LLP is required to submit a Form 11 annual return to the registrar within 60 days of the end of the fiscal year. Therefore, yearly returns must be submitted by May 30 of each year.

Filing of Statement of Accounts (Form-8)
1. By the 31 of March of each year, every LLP must have its accounts prepared and closed. At least two authorized partners are required to submit Form 8 to the registrar no later than 30 days following the end of the fiscal year. Because of this, the due date for LLP Annual Filing Compliance accounts is always 30 October
2. Limited Liability Partnerships (LLPs) having a turnover of more than ₹40 lakh or a contribution exceeding ₹25 lakhs. In this case the book of accounts has to be audited by a chartered accountant
3. LLPs that are required to get their books audited have a deadline of 30 September to file their tax return.



Penalty for Late Filing LLP, MCA or Income Tax Return
LLPs are subject to severe fines for filing MCA or income tax forms beyond the deadline. Failure to submit Form 8 or Form 11 may result in a fine of ₹100 per day per form. Hence, an LLP would be subject to a fine of ₹100 per day for failing to file Form 11, and ₹200 per day for failing to file Form 8.

LLPs would be subject to penalties under the Income Tax Act in addition to the MCA penalty for failing to file returns on time. Failure to file an income tax return results in a penalty of ₹5000 starting with the Assessment Year, if the return is due on July 31 and is filed between August and December of the same assessment year. An obligatory fine of ₹10,000 will be assessed if an income tax return that is due on July 31 is filed after 31 December of the same assessment year.

Income Tax Rate for LLP in India
Partnership firms and LLPs must pay a flat 30% income tax rate. Taxes cannot be calculated using the income tax slab rates because these rates are only applicable to individuals and HUFs. It would also be necessary to pay SHEC at 1% and the Education Cess at 2%. Moreover, a surcharge of 10% would be due if the partnership firm's revenue exceeded ₹1 Crore in any given fiscal year.


Recent Updates on LLP ITR Filing
  1.       ITR-1 :   Residents (except not habitually residents) with income up to ₹50 lakh from salaries, one house property, other sources (such as interest), and up to ₹5000 in agricultural income. Cannot be used if tax has been withheld under Section 194N or if income tax on ESOPs is owed.
  2.       ITR-2 :   Individuals and HUFs without company or professional profits or gains, but with capital gains or losses from the sale of assets such as equity shares, mutual funds, real estate, etc.
  3.       ITR-3 :   Individuals and HUFs who earn a living via the successes and gains of their enterprises or professions.
  4.       ITR-4 :   Residents with income from businesses or professions calculated under Sections 44AD, 44ADA, or 44AE, with a total income up to ₹50 lakh, and who are individuals, HUFs, or firms (other than LLP).
  5.       ITR-5 :   Individuals who are not (i) individuals, (ii) HUFs, (iii) businesses, or (iv) anyone submitting Form ITR-7.

ITR for LLP mandatory
Every LLP is required to submit an annual income tax return. The due date for an LLP return is always July 31. Nonetheless, any LLP that is the subject of a tax examination must submit its income tax return by September 30.

All the Limited Liability Partnership are required to maintain proper account banks on a cash basis or accrual basis. As Private Limited Companies are required to maintain books of accounts only on an accrual basis.
The LLPs have the option of maintaining the books of accounts on a cash basis as well. The books of accounts must be maintained at the registered office of the LLP and must contain all the information like:
1. Money received and spent
2. Assets and liabilities
3. Statement of COGS
4. Inventories and finished goods statement.
At the end of each financial year, the LLPs are required to prepare their financial statements within 6 months for filing with the ROC.

Statements of Accounts and Solvency
All registered LLPs are required to maintain their books of accounts and fill the data regarding the profits incurred as well as other financial data relevant to business and submit it along with Form 8 every year.

Form 8 must be attested by the designated partners by duly signing it. It is also necessary to get it certified by a practicing chartered accountant or a practicing company secretary or a practicing cost accountant.
Failing to filer the statement of accounts and the solvency report within the specified duration will lead to a penalty of Rs. 100 per day.


Annual filing for Limited Liability Partnerships
LLPs are required to elect the partners for maintaining proper books of accounts and filing the annual return with the Ministry of Corporate Affairs annually.
The book of accounts of the LLPs need not be audited except in case the annual turnover is more than Rs.40 lakh or if the contribution is more than Rs. 25 lakhs. Hence, the process of annual filing is simpler for the LLPs. Some of the annual filings are mandatory even if the LLP has begun the business or not.


LLP Tax Audit
LLPs are required to get the accounts audited by a practicing chartered accountant if the annual turnover in any financial year exceeds Rs. 40 lakhs or if the contribution exceeds Rs. 25 lakhs.
To avail exemption from audits, the LLP accounts must contain a statement by the partners to the effect that the partners acknowledge their responsibilities for complying with the requirements concerning accounting and preparation of financial statements.




Created & Posted by Suraj Kumar

Accountant at TAXAJ



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