ITR 5: What is ITR-5 Form, Format, and How to File Online for FY 2023-24 (AY 2024-25)?
Updated: Nov 11
ITR 5 is designed for firms, LLPs, AOPs, BOIs, and other artificial juridical persons. More importantly, the form ITR 5 caters to those entities which are outside the traditional corporate or individual tax brackets. As we are moving forward to the tax filing season for FY 2023-24 (AY 2024-25), understanding all the important points of ITR 5 can ease the process of filing.
In this article, we will explore ITR 5 form: what it is, how it is structured, who is required to use this form, and what makes it different from other ITR forms. We will also discuss the online filing process, trying to make what usually is a long-drawn and complicated process very short and easy to understand.
Table of Content
What is ITR 5 Form?
ITR 5 is the income tax form used by non-individual taxpayers in India. It is different from personal tax returns that are filed by individual taxpayers, for the simple reason that the ITR 5 covers all types of entities involved in numerous business activities but excludes companies that are registered under the Companies Act.
Who Should File ITR 5?
ITR 5 must be filed by:
Partnerships including Limited Liability Partnerships, LLPs
Associations of Persons (AOPs)
Bodies of Individuals (BOIs)
Artificial juridical persons
Cooperative societies and other cooperative entities
Estate of deceased, estate of insolvent, and business trust
How is ITR 5 Different from Other Forms?
While forms like ITR 1 and ITR 2 deal with individuals, ITR 5 caters to a more exhaustive list of non-corporate bodies. This form accommodates detailed disclosure for business activities, which is not relevant in personal tax filings.
Who Should Not File ITR 5?
ITR 5 form is used preferably by partnership firms, association of persons, body of individuals, and artificial juridical persons. The companies have a different income tax form, that is, ITR 6. On the other hand, individuals use forms ITR 1 to ITR 4. Thus, the following types of assessees are not required to file ITR 5:
Companies registered under the Companies Act
Individuals
Assessees required to file ITR 7
Key Components of ITR 5
The ITR 5 form is an extensive document which accommodates various and complex tax reporting requirements for non-individual entities like partnerships, LLP, AOP, BOI, and, artificial juridical persons. A thorough understanding of its structure is therefore essential to file the taxes correctly and efficiently. We will elaborate on each component of ITR 5 in detail:
Part A: General Information
General: This section is meant to be used for general information about the entity concerning its name, PAN, address, and nature of business. This establishes the base for the tax return and describes the identity of the taxpayer.
Manufacturing Account: This would apply to entities engaged in manufacturing and would define the production costs and values of goods produced.
Trading Account: This section presents purchases, sales, and inventory details for the trading activities of an entity.
Part B: Gross Total Income
B1 to B5: These subsections give the break-up of the income from all sources, like salaries, in cases where the entity has employees; rental income in the guise of income from house property; PGBP, meaning profits and gains business or profession; capital gains; and from other sources. Each of these needs detailed disclosure for the correct computation of tax.
Part C: Deductions and Taxable Total Income
This section contains the details of deductions under Sections 80C to 80U. These are deducted from the gross total income to arrive at the taxable income.
Part D: Computation of Tax Payable
Working out tax liability shall be done after deducting rebate and relief, if any, and add interest under Sections 234A, 234B, and 234C on any delay or deficiency in tax payment.
Part E: Other Information
Taxes Paid: Details of TDS, TCS, and Advance Tax paid are available in the schedule.
Donations: It contains space to report various donations eligible for deduction under Section 80G.
Schedules: Detailed Breakdown
Schedule HP: For income from house property.
Schedule BP: Computation of net profit or gain from business or profession as per the books of accounts.
Schedule CG: For reporting capital gains.
Schedule OS: Details income from other sources.
Schedule CYLA and BFLA: Set off of current year losses and brought forward losses from previous years.
Schedule CFL: Carry forward losses to future years.
Schedule VIA: Deductions under Chapter VI-A.
Schedule 80G: Details of donations entitled to deduction.
Schedule SPI, SI and EI: Details about the income of specified persons (like a spouse, or minor child), income chargeable at special rates and exempt income.
Schedule FSI and TR: Outside India's Income and the tax relief claimed.
Schedule FA: Foreign Assets
Schedule IT, TDS1 and TDS2: Advance Tax and Tax Deduction at Source by the entity on its behalf.
Documents and Information Needed for Filing ITR 5
Filing of ITR 5 requires a complete set of documents and records to ensure that it covers all the activities about finance and that these may be properly accounted for and reported in the relevant financial statement. Below is the list of key documents required to file ITR 5:
Partnership Deed: In the case of firms and LLPs, this deed spells out terms of partnership, profit-sharing ratio, and other operational details necessary for accurate reporting of income as well as deductions.
Financial Statements: This would include a balance sheet, profit and loss account, and cash flow statement, which present an overall view of the financial health of the entity and also form the basis for calculating taxable income.
Bank Statements: These are required to check the amounts declared in the financial statements and further trace any other income or deductible expenses not declared in any other books.
Audit Reports (if applicable): This is mandatory in the case of those entities which are subject to statutory audit under the Income Tax Act or any other act. The audit report will aid in establishing the authenticity of the financial statements filed.
Form 26AS: This is the tax credit statement, containing details of all TDS, TCS, and advance tax, paid relating to the PAN of the entity. It will help the ITD ensure that all taxes paid or deducted are considered while processing the ITR.
Statements of Capital Gains: This provides detailed transaction data related to capital gains or losses on the sale of assets which is useful for correct calculation.
Investment Records: The investments should be recorded and used for claiming deductions under sections such as 80C or for investments that have implications on capital gains.
Foreign Assets and Income: The details pertaining to foreign assets, including bank statements, and whether there is any income accruing from foreign sources will be required, for compliance with international taxation rules.
TDS Certificates: Such certificates would be issued by those entities that have made any payment to the declarant after deducting tax at source. These will play a critical role in reconciliations while matching Form 26AS to ensure that all credits are claimed pertaining to taxes paid.
Loan and Liability information: This is relevant for deducting interest expenses and disclosure related to the capital structure in the balance sheet.
ITR 5: How to File Online for FY 2023-24 (AY 2024-25)?
Step 1: Preparing to File
Gathering Documents: Collect all necessary documents enumerated above.
Assessing Accounts: Check financial statements against bank reconciliations and records of bank transactions.
Other Pre-Filing Requirements: Ensure that statutory audits and reports are ready and are prepared for filing
Step 2: Logging into the e-Filing Portal
Log in: Log in to the portal of Income Tax India e-filing (incometaxindiaefiling.gov.in).
Access ITR 5 Form: Log in and go to the 'e-File' tab on the menu, then select 'Income Tax Return'; then, select the assessment year for which you are filing the return.
Step 3: Filling out the Form
Enter General Information: Fill in the general information like the name, PAN, address, nature of business, and so on.
Input Financial Details: Fill in information in all sections of the form, from income to deductions to taxes paid and any other relevant financial data as per the schedules of ITR 5.
Step 4: Uploading Attachments
Required Documents: Attach all necessary documents, like the audit report or proof of tax payments, as mentioned.
Uploading Process: Attach all documents securely through the uploading facility on the portal in the proper format.
Step 5: Checking and Uploading the Form
Final Review: This form shall be submitted once all entries are checked for accuracy and completeness.
Submission: The form shall be submitted using a DSC. A Digital Signature Certificate is mandatory in ITR 5.
Verification: The return, after submission, shall be verified using the portal through the DSC so that it gets legal recognition.
Benefits of Timely and Accurate Filing ITR 5
Timely and accurate submission of the ITR 5 form results in certain benefits, most specifically to the following entities: partnerships, LLPs, AOPs, BOIs, and artificial juridical persons. These benefits lead to financial operations free from hassles and legal implications and enhance the credibility of the respective entity, with financial transparency. Benefits of filing ITR 5 are as follows:
Avoidance of Penalties and Interest: Timely filing of ITR 5 prevents the application of penalties and interest accruing toward late submissions. The Income Tax Act prescribes stiff fines and charges for late filings, which can enhance the financial burden significantly on the entity in terms of compliance. Filing on time ensures that such unwanted expenses are avoided.
Compliance with Legal Obligations: On-time filing of the ITR 5 and its accuracy ensure compliance with the tax laws and regulations. This not only relates to the legal standing of the entity but also forms a very important ingredient to claim a host of government schemes and other benefits where tax compliance has to be proved.
Smooth Processing of Loans and Credits: The most recent ITRs are generally requested by banks and financial institutions while processing any loan application. An honestly filled ITR 5 acts as proof of one's income and financial health, and can therefore affect the rate of credit or loan that is extended to any business. It gives the entity credibility and enhances creditworthiness.
Helps in Carry Forward Losses: Businesses can carry forward losses to offset future profits and gains, but only if the return forms part of the ITR and is filed within the specified due date. It is thus quite important that loss be correctly reported in ITR 5 so that a clear computation is established for future gain.
Supports the Audit and Legal Processes: Proper filing maintains an indication of all financial transactions, which in turn easily and on time facilitates the auditing processes without unnecessary hitches and discrepancies that would draw a lot of legal attention. A tax file that is well documented supports smoother audits and inspection processes by regulatory bodies.
Improved Relation with the Department: The regular and correct filing of ITR 5 builds a good compliance history with the tax authorities. The same can be useful if and when the entity has to enter assessment, appeal, or related probe proceedings since it evidences the latter's commitment to adhering to tax laws.
Speedy Processing of Refunds: In the case of entities who have paid more tax than required, timely and accurate filing of ITR 5 becomes crucial for speedy processing and easy refunds. Delayed or incorrect filings can lengthen the processing time and probable errors in refund calculations.
Better Financial Planning and Analysis: ITR filings are accurate, and this forms the base of sound and effective financial analysis and planning. They present an entirely clear view of the financial health of the entity and help in better budgeting, forecasting, and other strategic decisions.
Useful for Attracting Investors: The taxation returns of an entity are generally studied by investors to view the profitability, financial stability, and compliance of the law by the entity before they finally decide to invest in that entity. This calls for confidence in the investor through timely and accurately filed ITR 5 documents, leading to more investment opportunities.
Helps in Contractual Agreements: In cases of contractual engagement that require proof of fiscal responsibility, the filing of ITRs on time may turn out to be one of them. This goes to prove an entity's trustworthiness, reliability, and professionalism in handling issues within the bounds prescribed under the law.
Key Changes in ITR 5 Form in AY 2024-25
The following are the important changes made in the ITR-5 form in AY 2024-25
Provides the acknowledgement number for the audit report and UDIN
Shows the sum subjected to be paid to the MSME beyond the required time limit
Comprehensive data related to the use of capital gains accounts scheme
Under schedule 80GGC, the information is provided for contribution to the political parties in a detailed manner
Schedule OS is included in the bonus payment declaration under LIC policies, receipt information of the dividends from IFSC units.
Startups under section 80- IAC schedule ask for the incorporation information date, nature of business and certificate number obtained from the inter-ministerial board.
MSME particulars are required like the registration status number of allotted MSME.
In part A general new field has been added to Table A to capture the remuneration paid details in case of retiring partner more correctly.
The option of filing ITR has been added to the notice under 153C
In part A trading account two fields have been added to save the details of turnover and income from intraday trading
In the scheduled house property, the dropdown option for self-occupied property has been removed to select the type of house property.
ITR 5 Form Structure
The Form-5 has been divided into two parts, Part-A and Part-B, and various schedules:
Part-A Includes:
Part A: General information
Part A-BS: Balance Sheet as of 31st March of the financial year
Part A- Manufacturing Account for the financial year
Part A- Trading Account for the financial year
Part A-P&L: Profit and Loss Account for the financial year
Part A-OI: Other information
Part A-QD: Quantitative details
Part-B Includes:
Part B – TI: Computation of total income
Part B – TTI: Computation of tax liability on total income
Part-C Includes:
Tax payments that contain details of:
Payment of advance tax and tax on self-assessment tax
Tax deducted at source on income other than salary (16A, 16B, 16C)
The tax collected at the source
The final step is Verification.
ITR 5: Important Deadlines and Penalties for Late Filing
Filing ITR-5 after the due date can attract penalties:
Up to December 31: INR 5,000
After December 31: INR 10,000
For small taxpayers with a total income of up to INR 5 lakhs, the maximum penalty is INR 1,000.
For non-auditable entities: July 31 of the assessment year.
For auditable entities: September 30 of the assessment year.
Conclusion
Filing the ITR-5 form accurately and on time is essential for entities such as firms, LLPs, and cooperative societies to remain compliant with Indian tax regulations. A clear understanding of the ITR-5 form, gathering the required documents, and following the correct procedure can simplify the filing process and make it more efficient. It is crucial to double-check all information provided to avoid penalties or potential legal complications.
FAQ
Q1. What is ITR 5?
ITR 5 is a form used by firms, LLPs, AOPs, BOIs, artificial juridical persons for filing their income tax returns.
Q2. Who should file ITR 5?
ITR 5 shall be filed by partnership, LLP, AOP, BOI and certain trusts. It is not meant for companies or individuals.
Q3. How do I get the ITR 5 form online?
ITR 5 form can be downloaded and filed via the e-filing website of the Income Tax Department. The taxpayer must log in and choose ITR 5 for the relevant assessment year.
Q4. What documents are needed to file ITR 5?
You will need the partnership deed (if applicable), financial statements, audit reports (if required), tax audit details, and details of taxes paid such as TDS and advance tax.
Q5. Is digital signature mandatory for filing ITR 5?
Yes, a digital signature is mandatory to file ITR 5 because it is used generally by firms and large entities.
Q6. How can I verify my ITR 5 filing?
ITR 5 needs to be verified through a digital signature certificate only by the authorized signatory of the entity.
Q7. What are the due dates to file ITR 5 for FY 2023-24?
The due dates to file ITR 5 are as follows for different scenarios:
When accounts are to be audited under the Income Tax Act: 31 October 2024.
When Form 3CEB (Transfer Pricing Report) is to be furnished: 30 November 2024.
In other cases (where accounts need not be audited): 31 July 2024.
Q8. Can I revise ITR 5 after submitting it?
Yes, ITR 5 can be revised anytime before the end of the assessment year or before the completion of assessment, whichever happens early.
Q9. How to report business income in ITR 5?
Business income should be reported under the head 'Profits and Gains from Business or Profession', along with the details of incomes and expenses.
Q10. What if the entity has foreign assets or income?
Any foreign assets and foreign-sourced income are to be declared in ITR 5 under the relevant schedules, along with foreign tax credits claimed.
Q11. Who cannot use the ITR-5 form?
The ITR-5 form does not apply to individual taxpayers, Hindu Undivided Families (HUFs), companies, or entities required to file returns under sections 139(4A), 139(4B), 139(4C), or 139(4D) of the Income Tax Act.
Q12. What is the ITR-5 category?
The ITR-5 form is meant for firms, Limited Liability Partnerships (LLPs), Associations of Persons (AOPs), Bodies of Individuals (BOIs), Artificial Juridical Persons (AJPs), estates of deceased individuals, estates of insolvent individuals, business trusts, and investment funds.
Q13. What is the penalty for late filing of ITR-5?
Failure to file the ITR-5 by the due date may result in a penalty under Section 234F of the Income Tax Act. The penalty ranges from INR 1,000 to INR 5,000, depending on the date of filing and the entity's total income.
Q14. Is filing an ITR form mandatory?
Yes, filing an income tax return is mandatory for eligible taxpayers, as it provides detailed information about their income, liabilities, deductions, and taxes paid.
Q15. Is it mandatory to include a balance sheet for ITR 5 filing?
If the accounts have been audited, the figures mentioned in the balance sheet should match the audited balance sheet. Activities that are not accounted for in books must not be included.
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