ITR Filing for LLP Company

ITR Filing for LLP Company- Overview

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 organisational 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

Filing an Income Tax Return for your Limited Liability Partnership (LLP) offers numerous advantages, including maintaining compliance with legal obligations, and allowing for potential tax deductions. Additionally, it facilitates easier access to loans and funding, as well as protecting the LLP's legal status.

Here are four benefits of filing income tax return for LLP:

LLPs Have Lower Tax Rates: 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.

Numerous Tax Deductions are Available: 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.

LLPs can Claim Depreciation for Fixed Assets: 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.

Claim 100% Tax Deductions: 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 recognised 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

To file an Income Tax Return for your LLP, you'll need several key documents, such as the LLP's PAN, financial statements, and details of partners’ contributions. Having these documents organised will streamline the filing process.

The required documents are as follows:

• Initial costs
• TDS on LLP payments
• Take into account the LLP provisions of the GST (if applicable)
• Partners' compensation (Special Treatment).

LLP Income Tax Rates 2024 - 2025

A Limited Liability Partnership (LLP) is subject to 30% taxation for the Assessment Year (AY) 2024–2025. Furthermore, there are surcharge rates that are determined by the overall income, which are as follows: 10% if the income exceeds₹50 lakh, 15% if the income exceeds₹1 crore, 25% if the income exceeds₹2 crore, and 37% if the income exceeds₹5 crore.

Budget 2024 Tax Update: Revised Slabs in New Regime

Budget 2024 has upgraded the tax slab under the new regime. It will add ₹ 17,500 extra tax savings for a tax-paying citizen. Even the standard deduction has been increased to ₹ 75,000 and the family pension deduction has been increased from ₹ 15,000 to ₹ 25,000 and which will be applicable for FY 2024-25. Tax slabs before and after the budget are as given below:

What is Surcharge?

A surcharge is applied to the income tax at the following rates if the total income exceeds certain thresholds: 12% if the taxable income exceeds ₹1 crore.

What is Marginal Relief?

Marginal relief from the surcharge is provided as follows: If the net income exceeds ₹1 crore, the total income tax, including the surcharge, will not exceed the amount of income tax payable on a total income of ₹1 crore by more than the excess amount of income over ₹1 crore. This ensures that taxpayers with income slightly over ₹1 crore do not pay disproportionately higher taxes compared to those with exactly ₹1 crore. The relief is designed to minimise the impact of the surcharge for individuals whose income barely exceeds the ₹1 crore threshold.

What is Health and Education cess?

A Health & Education cess of 4% is also applicable on the total income tax plus any surcharge (if applicable).

Note: A firm or LLP is required to pay Alternative Minimum Tax (AMT) at 18.5% of book profit (plus surcharge and Health & Education cess, as applicable) if their normal tax liability is less than 18.5% of book profit.

How to File an LLP Income Tax Return

LLP income tax return filing is usually conducted on the official website of the Income Tax department. However the process involves a lot of paperwork and legalities. Even a single error may result in non filing of ITR. Vakilsearch offers a simplified solution for LLP income tax return filing. Game of tax experts can complete the whole process in just 3 easy steps.

Step 1: Get In-touch With our Tax Experts

Our team of tax experts will provide you clear insights on the LLP income tax return filing process. You will have to submit all the required documents.

Step 2: Initiating Paperwork

We will cross verify all the documents and initiate the paperwork required for LLP ITR filing.

Step 3: ITR filing for LLP

Our tax experts will file the income tax returns for LLP on your behalf. We will provide all the required data and clarity during and post filing your Returns.

The ITR Form 5 must be used to submit the LLP Income Tax Return. Any LLP registered in India is required to submit a tax return every year. The income tax website offers a download for ITR Form 5. The process of filing an LLP's income tax return is finished online. For income tax filing, an authorised partner's digital signature is necessary. All of this will be communicated by our tax experts.

Compliances by LLP

The following are some of the key compliances that LLPs must comply with:

• File an annual return with the Ministry of Corporate Affairs (MCA): LLPs must file an annual return with the MCA within 60 days of the closure of their financial year. The annual return contains information about the LLP's partners, management, and financial performance.
• File a statement of accounts and solvency with the MCA: LLPs must file a statement of accounts and solvency with the MCA within 30 days of the closure of their financial year. The statement of accounts and solvency contains information about the LLP's assets, liabilities, income, and expenses.
• Get their accounts audited: LLPs with a turnover of more than Rs. 40 lakhs or capital contribution of more than Rs. 25 lakhs are required to get their accounts audited by a chartered accountant.
• File an income tax return: LLPs are required to file an income tax return on or before 30th September of the financial year. The income tax return contains information about the LLP's income, expenses, and taxes payable.

Filing and Audit requirement under Income Tax Act

LLPs are taxed as pass-through entities, meaning that the income of the LLP is taxed in the hands of the partners, not in the hands of the LLP itself. However, LLPs are required to file an income tax return to report their income and expenses.

LLPs with a turnover of more than Rs. 40 lakhs or capital contribution of more than Rs. 25 lakhs are required to get their accounts audited by a chartered accountant. The audited accounts must be attached to the LLP's income tax return.

Failure to comply with the above requirements may result in penalties and other consequences. It is important for LLPs to ensure that they comply with all of the applicable laws and regulations.

LLP Annual Calendar

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 lakh.

Due Dates for Form Filing Tax for LLP

It's essential to be aware of the due dates for filing tax returns for LLPs to avoid penalties. Generally, the due date for filing the income tax return for an LLP is July 31st of the assessment year for those not requiring an audit, while audited LLPs must file by September 30th. Keeping track of these deadlines ensures compliance and smooth operation for your LLP. The Due dates are mentioned below:

Annual Return Filing (Form 11)

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)

By the 31 of March of each year, every LLP must have its accounts prepared and closed. At least two authorised 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.

• Limited Liability Partnerships (LLPs) having a turnover of more than ₹40 lakh or a contribution exceeding ₹25 lakh. In this case the book of accounts has to be audited by a chartered accountant
• 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.

What Is the 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.

Why Vakilsearch?

Vakilsearch ITR filing services for LLP companies are tailored to ensure that your tax compliance needs are met in a seamless and efficient manner. Our team knows that it is crucial to file the taxes within the time period to avoid penalties and we can get it done with the best possible service. Our team is known for their expertise and experience, you can be assured that your LLP company's tax filing is in good hands. Get in touch with us today and experience re ITR filing for your LLP.