What is ITR-5?
ITR-5 is the Income Tax Return form for entities other than individuals, HUFs, and companies. It covers a wide range of non-individual entities including partnership firms, Limited Liability Partnerships (LLPs), Association of Persons (AOPs), Body of Individuals (BOIs), artificial juridical persons, cooperative societies, and local authorities.
It is one of the most comprehensive ITR forms as it requires complete financial statements including Profit & Loss account and Balance Sheet.
Who Should File ITR-5?
| Entity Type | ITR Form |
|---|
| Partnership Firms (registered & unregistered) | ITR-5 |
| Limited Liability Partnerships (LLPs) | ITR-5 |
| Association of Persons (AOP) | ITR-5 |
| Body of Individuals (BOI) | ITR-5 |
| Cooperative Societies | ITR-5 |
| Local Authorities | ITR-5 |
| Artificial Juridical Persons | ITR-5 |
Tax Rate for Partnership Firms & LLPs
| Income Level | Tax Rate |
|---|
| All income levels (flat rate) | 30% on total income |
| Surcharge (income > ₹1 Crore) | 12% on income tax |
| Health & Education Cess | 4% on (income tax + surcharge) |
| Alternate Minimum Tax (AMT) | 18.5% if regular tax < AMT |
Key Deductions for Firms (Section 40B)
- Interest paid to partners: Allowable up to 12% p.a. on capital contribution
- Remuneration to working partners: Limited to prescribed limits based on firm profit
- Salary, bonus, commission to working partners: Within Section 40(b) limits
Tax Audit Requirement
Tax audit under Section 44AB is mandatory for partnership firms / LLPs if:
- Gross turnover exceeds ₹1 Crore (₹10 Crore if digital transactions ≥ 95%)
- Professional receipts exceed ₹50 Lakh
- Firm declares losses or income below presumptive limits
