LLP – Is it mandatory to file return
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Filing of LLP Income Tax Returns
A Limited Liability Partnership (LLP) is a type of organization in which two or more partners own and operate the company to make a profit.
A limited liability partnership is one in which each partner’s liability is limited. In such firms, one partner is not liable for the wrongdoing or ignorance of the other. Each year, every Limited Liability Partnership firm that is registered with the Ministry of Corporate Affairs must produce a statement of accounts and an annual report, regardless of revenue or profit.
Is it necessary to file an income tax return?
Yes, every Limited Liability Partnership (‘LLP’) must file an income tax return, regardless of the amount of profit or loss.
When filing a tax return, which form should you use?
ITR 5 is the form that a limited liability partnership (LLP) can use to file its tax return. If the LLP’s accounts are required to be audited under section 44AB, such firm’s must file their return of income online with a digital signature.
As a result, an LLP must file the following forms each year to stay in compliance and avoid penalties. Even if they haven’t opened a bank account or started doing business.
Important Due Dates for LLPs
Regardless of the activity, all LLPs must file the following documents:
In addition to the items listed below, a Limited Liability Partnership firm that is GST registered is required to file GST returns every month.
Form 11 (Annual Return) 30th May
ITR V (Income Tax Return) 31st July (If tax audit not required)
30th September (if tax audit required)
Form 8 (Statement of Accounts) 30th October
Limited liability partnership annual filings
The Limited Liability Partnership firm should file the returns on a regular basis to maintain compliance. This will also avoid the harsh penalties imposed by the law for non-compliance. When compared to the compliance obligations placed on private limited companies, a limited liability partnership has only a few compliances to follow each year. The fines, on the other hand, appear to be extremely high. Noncompliance can cost a private limited company up to INR 1 lakh in fines, whereas it can cost an LLP up to INR 5 lakh in fines.
Update on the LLP Form 8 and Income Tax Return Due Date Extension
Due to requests from various stakeholders for extensions of the due date for filing Form 8 for the Financial Year 2020–21 without paying additional fees due to challenges faced by LLPs due to the COVID-19 pandemic, the MCA (Ministry of Corporate Affairs) has decided to extend the due date for filing Form 8 for the Financial Year 2020–21 without paying additional fees until December 30, 2021.
In addition, in response to numerous petitions, the Central Board of Direct Taxes (CBDT) has announced the extension of the Income Tax filing deadlines. As a result, the deadline for filing Income Tax Returns for LLPs that do not require a Tax Audit has been extended to December 31, 2021, from July 31, 2021, and the deadline for filing IT Returns if Tax Audit is required for LLPs has been extended to February 15, 2022, from September 30, 2021, for the Financial Year 2020–21.
LLPs must file their tax returns using one of the following methods:
- a) Electronically, with a digital signature; or
- b) Transmitting the data in the return electronically using an electronic verification code; or
- c) Transmitting the return’s data electronically and then filing the return’s verification in Form ITR-V.
However, if an LLP’s accounts are audited under section 44AB, the report of income must be filed online with a digital signature.
Note:
For the assessment years 2021–2021, the deadline for filing income tax returns is December 31, 2021. Komplytek will make it simple for you to file your ITR.
Section 44AB: Tax Audit for certain persons
1. Persons carrying on business is liable for Tax Audit if their Sales/Gross receipts or Turnover exceeds Rs. 1 Crore during the previous year. This provision does not apply to anyone who choose the presumptive taxation system under section 44AD and have total sales or turnover of less than Rs. 2 crores.
Finance Act 2020 has inserted a new provision. Provided that, in the following cases, the limit of Rs. 1 crore has been increased to Rs. 5 Crore if:
- Cash receipts/ turnover does not exceed the five percent of the total receipts/ turnover &
- Cash payments made during the previous year does not exceed the five percent of the total payments.
Finance Act 2021 has increased the threshold limit from Rs. 5 crores to Rs. 10 crore and will take effect from 1st April 2021.
2. Professionals whose gross receipts surpass Rs. Fifty lacs during the previous year are subject to a tax audit.
