What Is Income Tax Filing for an LLP?
A Limited Liability Partnership (LLP) is treated as a separate legal and taxable entity under the Income Tax Act, 1961. Every LLP registered in India is required to file an Income Tax Return (ITR) every year, regardless of whether it has earned profit, incurred loss, or carried out business activities.
Income tax for an LLP is calculated on its net taxable profit, after allowing eligible business expenses, deductions, and partner remunerations as per the LLP Agreement.
Is Income Tax Filing Mandatory for LLP?
Yes. Income tax filing is mandatory for all LLPs, including:
- Active LLPs
- Dormant LLPs
- LLPs with no income
- Loss-making LLPs
Non-filing may result in penalties, interest, and scrutiny notices from the Income Tax Department.
Tax Rate Applicable to LLP
- Flat Income Tax Rate: 30%
- Surcharge: Applicable if income exceeds prescribed limits
- Health & Education Cess: 4% on total tax
⚠️ LLPs do not get any basic exemption limit.
Which ITR Form Is Applicable for LLP?
- ITR-5 is mandatory for LLP income tax filing
ITR-5 applies whether the LLP is:
- Under audit
- Not under audit
- Having profit or loss
Documents Required for LLP Income Tax Filing
- PAN of the LLP
- LLP Agreement
- Financial statements (Profit & Loss Account, Balance Sheet)
- Bank statements
- Partner remuneration & interest details
- TDS details (Form 26AS)
- Audit report (if applicable)
Step-by-Step Process for Filing Income Tax – LLP
Step 1: Prepare Financial Statements
Prepare:
- Profit & Loss Account
- Balance Sheet
Ensure:
- Partner remuneration and interest are as per LLP Agreement
- All expenses are properly supported
Step 2: Check Tax Audit Applicability
Tax audit is mandatory if:
- Turnover exceeds ₹1 crore (business)
- ₹50 lakh (profession)
Higher limits may apply if digital transactions exceed prescribed thresholds.
Step 3: Compute Taxable Income
- Start with net profit as per P&L
- Add disallowed expenses
- Deduct allowable expenses
- Deduct partner remuneration & interest within limits
Step 4: Login to Income Tax Portal
- Login using LLP PAN
- Select “File Income Tax Return”
- Choose the relevant Assessment Year
Step 5: Fill ITR-5 Details
Enter:
- LLP details
- Partner details
- Business income
- Balance Sheet and P&L figures
- Tax computation
Accuracy is essential to avoid notices.
Step 6: Pay Tax (If Applicable)
- Pay advance tax or self-assessment tax
- Enter challan details
Step 7: Submit Income Tax Return
- Validate all details
- Submit ITR-5 online
Step 8: Verify the Return
- Verify using Digital Signature Certificate (DSC) or EVC
⚠️ ITR is treated as invalid if not verified.
Important Due Dates for LLP Income Tax Filing
- 31st July – LLP not liable for audit
- 31st October – LLP liable for tax audit
(Dates may be extended by government notifications.)
Common Mistakes to Avoid
- Filing incorrect ITR form
- Incorrect partner remuneration calculation
- Missing audit applicability
- Late filing of return
- Forgetting to verify ITR
Benefits of Filing LLP Income Tax Return
- Statutory compliance
- Carry forward business losses
- Smooth loan and funding approvals
- Avoid penalties and interest
- Strong financial credibility
Why Choose Saving Mantra for LLP Income Tax Filing?
- CA-assisted ITR-5 filing
- Accurate tax computation
- Audit and non-audit support
- Error-free compliance
- Complete digital process
Disclaimer
This blog is for informational purposes only and does not constitute legal, financial, or tax advice. Income tax laws applicable to LLPs are subject to change and depend on individual business circumstances. Saving Mantra recommends consulting a qualified tax professional before filing income tax returns.