Filing of Income Tax for Limited Liability Partnership

A Limited Liability Partnership known as LLP is a body corporate formed under the Limited Liability Partnership Act,2008 which has a separate legal identity distinct from its partners.

An LLP as the name suggests the liability of the partners is limited to their agreed contribution in the LLP formed. However, they are liable to the full extent to the assets of the LLP. An LLP is a combination of Corporate structure as well as a partnership firm.

The personal liability of the partners is limited to their contribution except in case of fraud. Also, the partners are not liable or responsible for other partner’s misconduct or negligence as there is no clause of joint liability in case of LLP.

Ø  Heads of Income for LLP:

1)    Income from House Property:

Conditions for Taxability:

a) The house property should be any land or building thereto

b) The Taxpayer should be the owner of the property

c) The House property should not be used for the Business or profession of the LLP

2)    Income from Business and Profession:

The following income shall be taxable under the head Business and Profession:

a) Profits and gains from any business and profession carried on by the assessee for which the LLP is formed at any time during the relevant financial year

b) Any compensation or payment received or due to be received from any specified person.

3)    Income from Capital Gains:

Conditions for chargeability and taxability:

a) There should be a Capital asset.

b) It should be owned and then transferred by the taxpayer

c) There should be gain as a result of the transfer.

4) Income from Other Sources:

Any income not chargeable under the above heads will be included in the income from other sources except which is specifically excluded from the total income.

Ø  Tax Payment under LLP:

a)    As per Income Tax:

1) LLP is liable to pay tax at flat 30% on the total income.

2) The amount of tax calculated above shall be further increased by surcharge @ 10% where the total income exceeds 1 crore.

3) However, the surcharge shall be with respect to marginal relief if the total amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on the total income of 1 crore rupees by more than the amount of income that exceeds 1 crore rupees.

4) Further, the amount of tax will be further added by education cess and Secondary and higher education cess @ 3% of such tax amount and surcharge.

b)   As per the Alternate Minimum Tax Method:

1) Tax can be calculated and paid by LLP which cannot be less than 18.5% as increased by surcharges and education cess and secondary and education cess of the adjusted total income as per the provisions of section 115JC.

Ø  Tax Payment Method:

Taxes can be paid either electronically or through physical mode by downloading Challan ITNS 280 in the designated bank

Ø  Income Tax Return Filing:

1) It is mandatory to file Return of income for every LLP irrespective of the amount of income or loss.

2) Form ITR 5 shall be used in filing the return of LLP.

3)    Manner of furnishing the return:

Return for the LLP has to file has to be filed online by following the below modes:

a) By Digital Signature

b) Transmitting and submitting the data electronically under Electronic verification code

c) Transmitting and submitting the data electronically and thereafter submitting the verification of the return in the form of ITR V.

d) Kindly note it is mandatory to digitally sign the return if the accounts of LLP are required to be audited under section 44AB.

4)    Due Dates for Return Filing:

a) LLP whose turnover exceeds 40 lakhs or contribution exceeds 25 lakhs is required to get is accounts audited under section 44AB or under any other law: 30th September of the relevant assessment year.

b) LLP who is mandatorily required to furnish a report in Form No. 3CEB under section 92E: 30th November of the relevant assessment year. (As per section 92E of the Income Tax Act, 1961 LLP’s involved in an international transaction with associated enterprise or has undertaken a specified domestic transaction are required to furnish a certified report by a Chartered accountant)

c) In any other case: 31st July of the relevant assessment year.

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