ITR-5 Return Filing in India
The ITR-5 form is an income tax return form designed for specific entities such as firms, Limited Liability Partnerships (LLPs), Associations of Persons (AOPs), Bodies of Individuals (BOIs), and artificial juridical persons. It is used to report income, expenses, and tax liabilities while ensuring compliance with tax laws. However, individuals, Hindu Undivided Families (HUFs), and companies are not eligible to file ITR-5. The form consists of multiple sections, including general information, a balance sheet, a profit and loss account, and various schedules to capture financial details comprehensively. Filing ITR-5 can be done online through the Income Tax e-filing portal, either with a digital signature or by verifying the submission through ITR-V. Proper filing of ITR-5 is essential to avoid penalties and to ensure smooth financial planning for businesses.
WHO CAN FILE ITR-5?
- Firms – Partnership firms that do not fall under the ITR-4 category.
- Limited Liability Partnerships (LLPs) – LLPs must use ITR-5 to report their income and tax liabilities.
- Association of Persons (AOPs) – Groups of individuals or businesses that jointly conduct operations.
- Body of Individuals (BOIs) – A group of individuals earning income together but not as a firm.
- Artificial Juridical Persons – Entities that are legally recognized but not classified as companies, such as trusts or institutions.
WHO CANNOT FILE ITR-5?
- Individuals – Must use ITR-1, ITR-2, or ITR-3 based on income type (salary, house property, capital gains, etc.).
- Hindu Undivided Families (HUFs) – Required to file ITR-2 or ITR-3, as they are not considered businesses.
- Companies – Must file ITR-6 or ITR-7 depending on their status under the Companies Act.
Reason for Exclusion:
- Different Income Structures: Individuals and HUFs have varied income sources.
- Separate Legal Entities: Companies require specific reporting under ITR-6 or ITR-7.
- Specific Compliance Rules: Companies and individuals have distinct tax obligations.
- Compliance with Tax Laws: Filing ITR-5 ensures compliance with the Income Tax Act, 1961, helping businesses avoid penalties and legal issues.
- Allows Partnership Firms & LLPs to Declare Income: Firms and LLPs must report their profits, losses, and partner remuneration correctly to avoid tax scrutiny.
- Claiming Business Expenses & Deductions: Eligible deductions like rent, salaries, depreciation, interest on loans, and operational expenses can be claimed to reduce tax liability.
- Carry Forward & Set-Off of Losses: Business losses, speculative losses, and capital losses can be carried forward for up to 8 years, minimizing future tax burdens.
- Easier Loan & Credit Approval: A properly filed ITR-5 acts as proof of income and financial health, helping businesses secure loans, overdrafts, and credit facilities.
- Tax Benefits Under Various Sections: Firms and LLPs can avail of tax benefits under Section 80C, 80D, 80G, and other applicable provisions.
- Avoiding Penalties & Interest: Timely filing prevents penalties under Section 234F (up to ₹5,000) and interest under Sections 234A, 234B, and 234C for late tax payments.
- Transparency & Business Credibility: A well-maintained tax record enhances credibility with investors, partners, and financial institutions, improving business reputation.
- Facilitates Legal Documentation & Compliance: ITR-5 acts as a valid document for tenders, government contracts, and regulatory compliance with authorities like GST, SEBI, and RBI.
- Ensures Proper Taxation of Partner’s Share of Income: Filing ITR-5 ensures that the firm’s income is taxed separately, and partners can report their share of profit under exempt income in their individual returns (ITR-3/ITR-4).
Basic Business Information
- PAN (Permanent Account Number) of the entity
- Business name and address details
- Registration certificate of the entity
- Aadhaar details (if applicable)
- Date of incorporation
Financial Statements
- Balance Sheet: Assets, liabilities, and equity as of the financial year-end.
- Profit & Loss Account: Details of revenues, expenses, and net profit/loss.
- Cash Flow Statement: Inflow and outflow of cash during the financial year.
Bank Account Details
- Bank statements for the financial year
- Details of all active bank accounts, including IFSC codes
- Cancelled cheque (if required for verification)
Income Details
- Income from business and profession
- Capital gains details (if applicable)
- Income from house property
- Other income sources (interest, dividends, etc.)
Tax-Related Documents
- TDS Certificates (Form 16A, Form 26AS, etc.): Proof of tax deducted at source.
- Advance Tax Receipts: If advance tax payments were made.
- Self-Assessment Tax Challans: Proof of any self-paid taxes.
- GST Returns: If registered under GST, GST filing details are required.
Deduction and Exemption Proofs
- Investments under Section 80C (LIC, PPF, NSC, etc.)
- Health insurance premiums (Section 80D)
- Interest on home loans (Section 24(b))
- Donations made under Section 80G
- Other deductions under Chapter VI-A
Audit Reports (If Applicable)
- Tax audit reports (Form 3CA/3CB and 3CD)
- GST audit report (if turnover exceeds prescribed limits)
- Any other statutory audit reports
Previous Year’s Tax Returns
- Copy of the last filed ITR
- Computation of total income and tax liability
Depreciation Schedule
- Details of depreciation claimed on assets
- Any carry-forward depreciation from previous years
Loan and Liability Details
- Loans taken (bank/NBFC loans, secured/unsecured loans)
- Loan repayment schedules and interest paid details
Other Required Documents
- Shareholding details (if applicable)
- Details of related party transactions
- Any foreign asset or income details
- Dividend received from domestic companies
Filing ITR-5 is essential for firms, LLPs, associations, and certain other entities. This guide provides a step-by-step process to file ITR-5 online accurately.
Step 1: Determine Eligibility
Before filing ITR-5, ensure that you belong to one of the following categories:
✅ Partnership Firms
✅ Limited Liability Partnerships (LLPs)
✅ Association of Persons (AOPs)
✅ Body of Individuals (BOIs)
✅ Artificial Juridical Persons (AJPs)
✅ Business Trusts and Investment Funds
❌ Not applicable for individuals, HUFs, or companies required to file ITR-6.
Step 2: Gather Required Documents
Before proceeding, collect the necessary documents:
- PAN Card
- Aadhaar Card (for partners of LLPs/Firms)
- Partnership Deed (for partnership firms)
- Financial Statements (Balance Sheet, Profit & Loss Statement)
- TDS Certificates (Form 16A, 16B, etc.)
- Form 26AS (to check tax credits and TDS details)
- GST Returns (if applicable)
- Bank Account Details (for tax refund)
Step 3: Log in to the Income Tax Portal
- Go to the Income Tax e-Filing Portal.
- Click on "Login" and enter your PAN, password, and CAPTCHA code.
- Once logged in, navigate to "File Income Tax Return".
Step 4: Select the Correct ITR Form
- Choose the Assessment Year (e.g., 2023-24).
- Select ITR-5 as your return type.
- Choose the filing mode:
- Online filing (recommended for ease of use)
- Offline utility (for bulk data entry and complex returns)
Step 5: Fill in the ITR-5 Form
Provide the following details:
- General Information
- Name, PAN, Business Name
- Nature of Business / Profession
- Filing Type (Original / Revised Return)
- Income Details
- Business and Professional Income
- Capital Gains (if applicable)
- Rental Income (House Property)
- Income from Other Sources
- Tax Computation
- Compute Total Taxable Income
- Apply Deductions under Section 80C, 80D, etc.
- Calculate Tax Liability
- Tax Payments & Verification
- Verify Advance Tax and Self-Assessment Tax Paid
- Cross-check with Form 26AS
- Choose Verification Method (Aadhaar OTP, Net Banking, or DSC)
Step 6: Submit the Return and Verify
- Review all details carefully.
- Click on "Submit" the ITR-5 form.
- Verify the return using:
- Aadhaar OTP
- Net Banking
- Digital Signature Certificate (DSC)
Note: If you choose manual verification, send the signed ITR-V to CPC, Bangalore within 120 days.
Step 7: Download Acknowledgment
- After successful submission, download the ITR-V Acknowledgment for future reference.
Important Points to Remember
- ITR-5 is mandatory for LLPs, firms, and business entities (except companies).
- Filing before the due date (31st July for non-audited cases, 30th September for audited cases) prevents penalties.
- Maintain proper records of income, expenses, and tax payments.
- Revised returns can be filed if errors are found.
Common Mistakes to Avoid While Filing ITR-5
- Incorrect Selection of Form: Make sure you're using ITR-5 if you're filing for a partnership firm, LLP, AOP, BOI, etc. Using the wrong form can lead to rejection of the return.
- Incorrect Details of the Entity: Ensure that the correct legal name, PAN, and address of the entity are provided. Mistakes in these details can cause delays in processing your return.
- Mismatch of Income and Deductions: Ensure that all income sources (business, capital gains, etc.) are correctly reported. Similarly, verify deductions and exemptions to avoid discrepancies.
- Incorrect Audited Accounts: If the entity is required to get its accounts audited, make sure the audited financial statements (balance sheet, profit and loss) are filed along with the return.
- Incorrect Reporting of Partner's/Member’s Details: Report the correct share of income of partners/members and ensure the profit-sharing ratio is accurate.
- Failure to Report All Transactions: Failing to report all bank accounts, investments, and financial transactions can lead to issues with the tax authorities.
- Failure to Claim Applicable Deductions: Make sure you claim all eligible deductions under sections like 80C, 80G, 80D, etc., if applicable to your entity.
- Incorrect Calculation of Tax Payable: Double-check the calculation of tax liability, ensuring that the entity qualifies for any tax reliefs or exemptions available.
- Not Filing ITR on Time: Filing the return after the due date can result in penalties under Section 234F. Always file within the deadline to avoid late fees and interest.
- Not Maintaining Proper Books of Accounts: Ensure your entity has maintained proper books of accounts as required under the Income Tax Act. Lack of proper documentation can lead to problems during assessment.
- Incorrect Bank Details for Refund: Ensure the correct bank account details (if applicable for refunds) are provided to receive the refund promptly.
- Incorrect Claim for Losses: If the entity has suffered losses, verify that they are claimed correctly, as failing to do so can prevent future carry-forward of such losses.
Due Date for AY 2024-25
- Without Audit: 31st July 2024
- With Audit (Section 44AB): 31st October 2024
Penalty for Late Filing
- Before 31st December 2024: ₹5,000
- After 31st December 2024: ₹10,000
- If Total Income ≤ ₹5 Lakhs: ₹1,000
- Interest (Section 234A): 1% per month on unpaid tax after due date.
- Loss Carry Forward Not Allowed if filed after due date.
Understanding income tax slabs is key to effectively managing your tax obligations in India. These slabs are structured to align with the principle of progressive taxation, where higher income leads to higher tax rates. This ensures an equitable distribution of the tax burden across the population.
Categories of Income Taxpayers in India
India’s tax system divides taxpayers into three primary categories based on age:
- Individuals Under 60 Years: Regular working individuals and professionals.
- Senior Citizens (60–80 Years): Enjoy higher exemption limits due to lower earning
potential in retirement. - Super Senior Citizens (Above 80 Years): Further increased exemptions to reduce tax
burdens on the elderly.
Direct Tax System in India
The government introduced the new tax regime alongside the old one to provide taxpayers flexibility:
- Old Regime: Offers various deductions and exemptions.
- New Regime: Simplified but with fewer exemptions.
Old Regime:
|
Slabs (Rs.)
|
Individuals (Age < 60 years)
|
Resident Senior Citizens(60 to 80 years)
|
Resident Super Senior Citizens(80 years and above)
|
|---|---|---|---|
New Regime:
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Frequently Asked Questions in India
What is ITR-5?
ITR-5 is the income tax return form used by entities like firms, LLPs, Associations of Persons (AOPs), Bodies of Individuals (BOIs), and others, to file their tax returns
Who needs to file ITR-5?
Entities such as partnership firms, LLPs, AOPs, BOIs, and certain trusts or co-operative societies need to file ITR-5
What is the due date for filing ITR-5?
- For entities requiring an audit: 31st October.
- For entities not requiring an audit: 31st July.
Can I file ITR-5 offline?
Yes, ITR-5 can be filed both online and offline, but online filing is mandatory for most taxpayers
What documents do I need to file ITR-5?
- PAN details of the entity.
- Balance sheet and profit and loss statement.
- Audit report (if applicable).
- Partnership deed (for partnership firms).
- Details of income and deductions.
Do I need to get my accounts audited to file ITR-5?
If your entity’s turnover exceeds the prescribed limit, or if it’s required under any law, the accounts need to be audited
What happens if I file ITR-5 after the due date?
Late filing attracts penalties under Section 234F, which can be ₹5,000 if filed by December 31st and ₹10,000 after that
Can I claim deductions under ITR-5?
Yes, you can claim various deductions under sections like 80C, 80D, 80G, etc., based on the nature of your entity
What is the penalty for filing incorrect information in ITR-5?
If incorrect information is provided, penalties can be levied, and the return may be reassessed
What is the income limit for filing ITR-5?
There is no specific income limit for filing ITR-5, but entities must file if they earn any taxable income during the financial year
Can I carry forward losses in ITR-5?
Yes, you can carry forward business or capital losses to offset against future income, but only if you file your return on time
What if I have multiple sources of income?
You need to report all income sources, including business income, capital gains, and other income, on ITR-5
Can I file ITR-5 if I have a partnership firm?
Yes, partnership firms must use ITR-5 to file their returns
Is it mandatory to e-verify the ITR-5?
Yes, once you file ITR-5, you must e-verify it using methods like Aadhaar OTP, Net Banking, or physical verification
Can I file ITR-5 for a dormant LLP or firm?
Yes, even if the LLP or firm is dormant and has no income, you still need to file ITR-5 for compliance purposes
Do I need to submit my audited financial statements?
Yes, if applicable, you need to submit the audited financial statements along with the return
What is the tax rate applicable to LLPs or firms filing ITR-5?
LLPs and firms are taxed at a flat rate of 30%, along with applicable surcharge and cess
Can I make corrections to ITR-5 after submission?
Yes, if you’ve made an error, you can file a revised return under Section 139(5) within the time limit
How do I calculate income in ITR-5?
Income is calculated based on the accounting records of the entity, including income from business, interest, dividends, and other sources
What is the difference between ITR-4 and ITR-5?
ITR-4 is for individuals, HUFs, and small businesses, whereas ITR-5 is specifically for firms, LLPs, and other similar entities
