ITR-5 Form for Partnerships and LLPs Explained
- PRITI SIRDESHMUKH
- Oct 4
- 9 min read
ITR-5 is the prescribed income tax return form for partnership firms, LLPs, and other non-company entities in India. Filing it accurately ensures compliance with the Income Tax Act, 1961, helps declare business income, and supports audit requirements where applicable. The form acts as proof of financial credibility for banks and regulators, making it vital for business operations. Platforms like TaxBuddy simplify the ITR-5 filing process, offering user-friendly guidance and ensuring timely, secure submissions without errors.
Table of Contents
What is ITR-5?
ITR-5 is a return form for entities such as LLPs, partnerships, firms, AOPs, BOIs, and other similar organisations. It is used to report income from business or profession, capital gains, other sources of income, and taxes paid or deducted. Unlike individual ITR forms, ITR-5 is designed for entities that do not fall under the category of companies or charitable trusts but still need to comply with corporate tax provisions.
Who Should File ITR-5?
ITR-5 is a specific Income Tax Return form designed for certain types of entities other than companies and individuals. It is primarily meant for entities that are engaged in business or professional activities but do not fall under the category of a company. Understanding who should file ITR-5 is crucial to ensure proper compliance with the Income Tax regulations and to avoid any processing delays or notices from the Income Tax Department.
The entities required to file ITR-5 include Limited Liability Partnerships (LLPs), which are registered partnerships with limited liability for their partners. Partnership firms that operate as a collective business entity and share profits among partners also fall under this category. Additionally, an Association of Persons (AOP) or a Body of Individuals (BOI) engaged in business or profession is required to file this form. Hindu Undivided Families (HUFs) involved in any business or professional activity must also submit ITR-5. Certain local authorities and co-operative societies, where applicable, are mandated to use this form as well.
It is important to note that companies, individuals, and trusts are excluded from filing ITR-5 and must use the relevant forms prescribed for their category. Filing the correct ITR form is essential because submitting an incorrect form can result in processing delays, discrepancies in tax records, or notices from the Income Tax Department seeking clarification or correction. Accurate filing ensures smoother compliance, faster processing of returns, and avoidance of penalties.
Key Features of ITR-5
The ITR-5 form is specifically designed for individuals, Hindu Undivided Families (HUFs), and businesses that have income from business or professional sources but do not qualify for filing ITR-3. One of its primary features is the ability to comprehensively report business or professional income. This ensures that professionals, small businesses, and proprietorships can accurately disclose earnings from their commercial activities, maintaining compliance with the Income Tax Act.
In addition to business income, ITR-5 allows taxpayers to declare income from other sources, capital gains, and exempt income. This makes it a versatile form, as it caters to multiple streams of income in a single filing. By including TDS (Tax Deducted at Source), advance tax, and self-assessment tax details, the form ensures that all payments already made towards taxes are accurately recorded, helping prevent errors in tax computation and enabling proper credit against the total tax liability.
ITR-5 can be filed using either the JSON or Excel utility format, providing flexibility based on the taxpayer’s convenience and familiarity with digital filing tools. For taxpayers required to undergo audit under Section 44AB, the form provides dedicated fields to report audit details. This integration ensures transparency and compliance with statutory audit requirements.
Finally, the form supports e-verification, which is essential for faster processing of refunds. By allowing electronic verification, taxpayers can complete the filing process securely and efficiently without the need to physically submit signed documents, speeding up refund issuance and reducing administrative delays.
Mandatory Documents for Filing ITR-5
PAN of the entity
Bank account details, including IFSC code
Financial statements: Profit & Loss Account, Balance Sheet
TDS certificates (Form 26AS or Form 16A)
GST and other tax compliance documents (if applicable)
Audit report (if the entity is required to be audited)
Due Dates and Filing Timelines
For entities not requiring an audit, the filing of Income Tax Returns (ITR) is generally expected by July 31 of the assessment year. This deadline is applicable to most individuals, Hindu Undivided Families (HUFs), Association of Persons (AOPs), and other non-audit entities. Filing by this date ensures that taxpayers avoid late fees, interest on outstanding taxes, and unnecessary notices from the Income Tax Department. It also helps in the timely processing of refunds for those who are eligible.
For entities that are subject to an audit, the deadline for filing ITR is extended to October 31 of the assessment year. This additional time allows businesses and professionals to complete the audit of their accounts, reconcile financial statements, and prepare accurate returns without the pressure of the original July 31 deadline. Filing within this extended period ensures compliance with Section 44AB of the Income Tax Act and avoids penalties associated with late submission.
In cases where taxpayers miss both the standard and extended due dates, belated filing is permitted until December 31 of the assessment year. While this option allows taxpayers to remain compliant, it comes with penalties and interest on any unpaid taxes. Belated returns are processed after on-time returns, which may result in delays in refund disbursal. Adhering to these timelines is crucial to maintain smooth tax compliance and avoid unnecessary complications with the tax authorities.
Step-by-Step Process to File ITR-5
Download the ITR-5 utility (Excel or Java/JSON) from the Income Tax Department website.
Fill in the entity details, including PAN, address, and type of entity.
Enter financial information: income from business or profession, capital gains, and other sources.
Report taxes paid: TDS, advance tax, and self-assessment tax.
Validate the form using the built-in validation tool.
Generate the JSON file for online submission.
Log in to the Income Tax e-filing portal and upload the JSON file.
Complete e-verification using Aadhaar OTP, Net Banking, or Digital Signature Certificate (DSC).
ITR-5 and Bank Account Opening
Filing ITR-5 can be a prerequisite for opening or maintaining business bank accounts. Banks often require the latest ITR-5 to verify the entity’s income, compliance status, and tax payment history. Submitting an updated ITR-5 ensures smooth banking operations, loan approvals, and other financial services.
Common Mistakes to Avoid While Filing ITR-5
Filing ITR-5 accurately is crucial for businesses and professionals, but there are several common errors that taxpayers often make, which can lead to delays, notices, or even penalties. One frequent mistake is entering an incorrect PAN or selecting the wrong entity type. For example, a partnership firm might accidentally select a category meant for LLPs or private companies, which can cause processing errors or rejection of the return.
Another common issue arises when there is a mismatch between the TDS credits claimed in the ITR and the details reflected in Form 26AS. This can occur if TDS from multiple sources has not been correctly accounted for or if there is a delay in TDS credit updates from deductors. Such mismatches often trigger notices from the Income Tax Department, requiring additional time and effort to resolve.
Missing audit details is another frequent error, particularly for entities required to undergo audit under Section 44AB. Omitting the auditor’s report, audit fee, or summary of audited accounts can lead to rejection or scrutiny of the return.
Omitting income from other sources or capital gains is also a common oversight. Many taxpayers fail to report interest from savings accounts, fixed deposits, rental income, or gains from the sale of property or securities. Even minor omissions can result in notices, interest, or penalties.
Finally, filing after the due date without calculating applicable penalties and interest is a critical mistake. Taxpayers often assume that filing late will automatically be accepted, but belated returns attract late fees under Section 234F and interest under Sections 234A, 234B, and 234C, which can increase the overall tax liability.
Using a reliable platform like TaxBuddy can significantly reduce these errors. The software automatically cross-checks TDS entries, tax payments, and other financial details against official records, ensuring accurate reporting and minimizing the risk of notices or penalties. Additionally, TaxBuddy provides step-by-step guidance and reminders, making the ITR-5 filing process smoother and more compliant.
Role of TaxBuddy in ITR-5 Filing
TaxBuddy provides a seamless solution for ITR-5 filing, offering both DIY and expert-assisted plans. It helps in:
Pre-filling TDS and tax payment information
Validating audit reports and financial statements
Ensuring compliance with all updates in the FY 2024-25 ITR-5 form
Secure e-filing and easy e-verification
Tracking refund status and managing future tax planning TaxBuddy ensures accuracy, reduces the risk of notices, and simplifies the filing process for businesses and professionals.
Conclusion
Filing ITR-5 is critical for LLPs, partnerships, AOPs, and other applicable entities to maintain tax compliance and financial transparency. Using accurate forms, following due dates, and avoiding common mistakes are essential to ensure smooth processing and timely refunds. For anyone looking for assistance in ITR-5 filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR-5 filing, or only expert-assisted options?
TaxBuddy provides both self-filing and expert-assisted plans for ITR-5. Businesses and LLPs can choose the self-filing option if they are comfortable using the platform and uploading required financial statements. Alternatively, the expert-assisted plan allows TaxBuddy’s team of professionals to prepare, validate, and file ITR-5 on behalf of the business, ensuring accuracy and compliance.
Q2. Who is eligible to file ITR-5?
ITR-5 is mandatory for Limited Liability Partnerships (LLPs), partnerships, Association of Persons (AOPs), Body of Individuals (BOIs), and cooperative societies that are not required to file ITR-7 or ITR-3. It is primarily used by entities that do not have complex corporate structures but still need to report business or professional income.
Q3. What documents are mandatory for ITR-5 filing?
Key documents for ITR-5 filing include:
PAN and TAN of the entity
Financial statements: Profit & Loss account, Balance Sheet
Tax audit report (if applicable)
Details of TDS/TCS, advance tax paid
Bank account details for refund
GST and other relevant compliance reports (if applicable)
Q4. Can an LLP file ITR-5 after the due date?
Yes, an LLP can file belated ITR-5 after the due date (September 15, 2025 for non-audit LLPs). However, filing after the deadline incurs penalties under Section 234F and may attract interest on any tax dues. It is recommended to file as early as possible to avoid additional charges.
Q5. Is e-verification mandatory for ITR-5?
Yes, e-verification is mandatory for ITR-5. Without verification, the return will be considered incomplete, and the Income Tax Department will not process refunds or assess tax compliance. E-verification can be done through Aadhaar OTP, net banking, or digital signature certificate (DSC) for entities.
Q6. Can TaxBuddy help with TDS mismatch issues in ITR-5?
TaxBuddy provides tools and professional support to identify and resolve TDS mismatches. The platform automatically cross-verifies the entity’s TDS details with Form 26AS, flags discrepancies, and guides users on corrective actions before filing the return.
Q7. How do I report income from capital gains in ITR-5?
Income from capital gains must be reported in the designated schedule within ITR-5. TaxBuddy simplifies this by allowing you to enter sale and purchase details, automatically calculate short-term or long-term capital gains, and account for exemptions or indexation benefits, ensuring accurate reporting.
Q8. Does filing ITR-5 help in opening a business bank account?
Yes, filing ITR-5 serves as a proof of income and compliance for the LLP or business. Banks often require recent ITR filings while opening a current account or applying for business loans, making timely filing essential for smooth financial operations.
Q9. What are the penalties for late filing of ITR-5?
Late filing attracts penalties under Section 234F:
₹5,000 if filed after the due date but before December 31
₹10,000 if filed after December 31 Additionally, interest under Sections 234A, 234B, and 234C may apply on any unpaid tax, increasing the overall liability.
Q10. Can ITR-5 be revised after submission?
Yes, ITR-5 can be revised under Section 139(5) if errors or omissions are discovered after submission. Revised returns can correct mistakes in income, deductions, or TDS reporting. However, revisions must be filed before the end of the relevant assessment year or within 24 months from the original due date.
Q11. How does TaxBuddy ensure error-free ITR-5 filing?
TaxBuddy uses an AI-driven platform combined with expert oversight to ensure accurate filing. The system validates entries against financial statements, TDS records, and statutory requirements. Real-time error alerts, automated calculations, and professional checks minimize discrepancies and reduce the risk of notices from the Income Tax Department.
Q12. Is it necessary to attach audit reports while filing ITR-5 for audited entities?
Yes, if the LLP or partnership is subject to tax audit under Section 44AB, the audit report in Form 3CD must be attached while filing ITR-5. TaxBuddy facilitates uploading and linking audit reports directly within the platform to ensure full compliance with Income Tax requirements.
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