Since it is not mandatory to register a partnership firm in India, there are registered and unregistered firms. However, for tax purposes, they are treated the same. Registered firms have a Registration Certificate from the Registrar of Firms. On the other hand, unregistered firms don’t have any such certificate. Today, we are going to talk about partnership firm tax return filing and provide all the details that you need for the same.
Partnership Firm Tax Return Filing – Tax Rates
It is mandatory for every partnership firm to file the return of income regardless of its registration status or amount of profit or loss.
The tax rate for a partnership firm is 30% of its total income.
Surcharge
If the total income exceeds Rs.1 crore, then the partnership firm will have to pay a surcharge at the rate of 12% of the calculated tax.
Marginal Relief: The total amount [income tax + surcharge] cannot exceed the total amount payable as income tax on the total income of Rs.1 crore by more than the amount of income that exceeds Rs.1 crore.
Cess
The partnership firm will also have to a health and education cess at the rate of 4% of [income tax + surcharge].
Alternate Minimum Tax
The tax payable cannot be less than 18.5% of the adjusted total income of the firm. In such cases, the firm needs to pay income tax on this adjusted income at the rate of 18.5% (surcharge and cess extra).
Partnership Firm Tax Return Filing – Calculating Income Tax
While calculating the income tax of your partnership firm, it is important to note that you cannot deduct the following expenses from your taxable income:
- Amount paid as salary, commission, or bonus to non-working partners
- Any remuneration paid to the partners that is not in accordance with the terms of the partnership deed (this also includes any interest paid to the partners)
- Any interest or remuneration paid to the partners relating to a period prior to the date of the partnership deed
- Interest paid to the partners exceeding 12% simple interest per annum
- Any remuneration paid to the partners that exceed the following limits:
- On first Rs. 3 Lakhs of book profit or in case of loss – Rs. 1,50,000 or 90% of book profit, whichever is more
- On the balance of the book profit – 60% of book profit
Partnership Firm Tax Return Filing – Form
A partnership firm can file returns in the Form ITR5. This form is divided into 2 Parts and 31 Schedules. This is an attachment-less form and you don’t need to submit any documents while partnership firm return filing.
Partnership Firm Tax Return Filing – Process
You can file the income-tax return of your partnership firm online via the Income Tax website or manually.
For online partnership firm tax return filing, you need one partner to have a Class II digital signature certificate (DSC). You can also file returns online using the Electronic Verification Code (EVC). However, if you are liable to get your firm audited under Section 44AB, then opt for e-filing using a DSC.
For manual filing, you need to print two copies of ITR-V. You need to sign one copy and send it to the CPC at Bangalore via ordinary post. You must also retain the other copy for your record.
Due Date
| Particulars | Due Dates |
| A firm who is required to get its accounts audited under the Income-tax Act or under any other law | September 30 of the assessment year |
| A firm who is required to furnish a report in Form No. 3CEB under section 92E | November 30 of the assessment year |
| In any other case | July 31 of the assessment year |
Remember to check the due dates before you plan your return filing.
Tax Audit Requirement
It is mandatory to get your accounts audited if:
- Your partnership firm has a turnover of:
- > Rs.1 crore (for business)
- > Rs.50 lakh (for profession)
Summing Up
We hope that this article provided all the information that you were looking for regarding partnership firm tax filing. Please refer to the Income Tax Department’s official website for any latest updates regarding the same.
