Partnership is the relationship between persons who have agreed to share the profits of a business carried on by all or any of them. Similar to an LLP, Partnership firms are also liable to pay income tax at the rate of 30% of total income.
In addition to the income tax, a partnership firm is also liable to pay income tax surcharge on the amount of income tax at the rate of 12% when total income exceeds INR 1 cr. Education cess and secondary & higher education cess are also applicable on the amount of income tax and surcharge at 2% and 1% respectively.
Alternate Minimum Tax:
Similar to an LLP, a partnership firm is also required to pay alternate minimum tax at the rate of 18.5% of Adjusted Total Income. Alternate minimum tax would be increased by the applicable surcharge, education cess and secondary and higher education cess.
Partnership Firm Tax Return Filing:
Partnership firms are required to file income tax return in Form ITR-5. Like all other income tax forms, there is no requirement for submitting any documents or statements along with a partnership firm tax return in Form ITR-5. However, the taxpayer must save all records pertaining to the business and produce the same before tax authorities when requested.
Requirement of Audit for Partnership Firms:
If the turnover of the partnership firm exceeds INR 1 cr in the financial year or those firms carrying on professional activity’s gross receipts in profession exceed INR 50 lakhs in the financial year are required to have its books of accounts audited by a practicing Chartered Accountant.
Due Date for Filing Partnership Firm’s Tax Return:
Partnership firms operating in India are required to file income tax return every year. The income tax return of a firm, which does not require an audit, is due on 31st July each year. In case if the firm’s books of accounts need to be audited under the Income Tax Act, the returns would be due on September 30th.
Bank Statement Reconciliation
Financial Statement Preparation
Business Income Tax Return Filing
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NOTE: These charges are applicable for all partnership firms having turnover of less than INR 25 lakhs. In case of a tax audit, additional charges will be applicable.
MyDBiz is the market leader in providing compliance services in India. Before we get started with the engagement, all the required information and documents are collected. An engagement manager would be assigned who will be the point of contact till the engagement is completed. The average time required to complete the tax return filing compliance is 4-5 working days depending on the government processing time and client document submission.
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