What is ITR 5? A guide for partnership firms and LLPs

Income tax return (“ITR”) filing is an essential responsibility for businesses, including Partnership firms, Limited Liability Partnerships (“LLPs”), associations, and other bodies. The ITR 5 Form is specifically designed for these entities to report their income and tax obligations.

What is ITR 5?

ITR 5 is the income tax return form for Partnership firms, LLPs, Associations of persons (“AOPs”), and Body of individuals (“BOIs”) that do not require to file ITR 7 (for trusts) or ITR 6 (for companies).

This form allows these entities to report their financial details, income, deductions, and tax liabilities to the Income tax department of India.

Who can file ITR 5?

Also Learn: ITR 1 vs ITR 2: Which Form Should You Choose?

Who cannot file ITR 5?

Why is ITR 5 required?

Filing ITR 5 is mandatory for partnership firms, LLPs, associations and bodies to report their financial activities and comply with tax regulations. Key reasons why it is essential:

• Legal compliance: Timely filing prevents penalties and legal issues under the Income Tax Act.
• Tax liability calculation: Using ITR 5 form ensures accurate tax computation and deductions.
• Business loans & funding: Banks and financial institutions may require ITR records for businesses and firms.
• Claiming refunds: It helps claim tax refunds on excess TDS/TCS or advance tax paid.

Also Learn: How to File ITR 4 Online: A Step-by-Step Guide

Documents required for filing ITR 5

Filing ITR 5 for partnership firms and LLPs requires several financial and legal documents. These documents help in computing income, claiming deductions, and ensuring compliance with tax laws. Below is a detailed list of the documents needed for filing ITR 5.

1. PAN and Aadhar details

• PAN card of the Partnership firm/LLP: Required for identification and tax filing.
• Aadhaar card (if applicable): Mandatory for partners in a firm for authentication.

2. Financial statements

Financial statements form the basis of income tax computation. The following documents are required:

• Balance sheet: Details of assets, liabilities, capital, and reserves.
• Profit & loss (P&L) account: Details of revenue, expenses, other income and gains/loss for the financial year.
• Trial balance: Summary of all ledger balances for reconciliation.
• Bank statements: Transactions for verification of income and expenses and balance of cash/deposits.

3. Tax-related documents

These documents are crucial for computing taxes and ensuring correct tax payments:

• TDS certificates (Form 16A, 16B, 16C, 26AS): Proof of tax deducted at source.
• Advance tax and self-assessment tax receipts: Proof of tax payments made.
• GST returns (if applicable): GST filing details to reconcile with income tax returns.
• Tax audit report (Form 3CA/3CB & Form 3CD): Required if turnover exceeds ₹1 crore for businesses (₹10 crores if digital transactions exceed 95%).

4. Partner/LLP details

• Deed of partnership or LLP agreement: Required for legal verification.
• Details of partners (Name, PAN, Aadhaar, Profit-sharing ratio, Capital contribution, etc.)

5. Income and investment details

• Details of business income: Income from trading, manufacturing, or service activities.
• Income from other sources: Interest, capital gains, rental income, etc.
• Details of investments eligible for deductions: Under Section 80C to 80U (e.g., LIC, PPF, NSC).
• Depreciation schedules: Details of assets for claiming depreciation under Income Tax Act, 1961.

6. Other essential documents

• Audit reports (if applicable): For firms requiring compulsory tax audits.
• Details of loans and liabilities: Bank loans, unsecured loans, or liabilities.
• Previous year’s ITR copy: For income comparison and verification.
• Turnover certificate: Required for businesses exceeding ₹1 crore turnover.

Also Learn: How to File ITR 3: A Step By Step Guide

How to file ITR 5?

Filing ITR-5 involves providing detailed financial information, especially for business or professional income. Below is a step-by-step guide to file ITR 5 online:

Also Learn: What is ITR 3 Form of Income Tax? A Comprehensive Guide

Step 1: Log in to the income tax portal

1. Visit the official Income Tax e-Filing website: https://www.incometax.gov.in/iec/foportal/.
2. Click on Login and enter your PAN/Aadhaar, password, and Captcha.

Also Learn: Who Should File ITR 2: A Comprehensive Guide

Step 2: Select ITR-5 form

1. Navigate to e-File > Income Tax Returns > File Income Tax Return.
2. Select Assessment Year (e.g., AY 2024-25).
3. Select the ITR Form Type – ITR-5.

Step 3: Fill in the required details

ITR 5 consists of the following sections:

• General information – Name, PAN, business type, and financial year

Also Learn: Who Can File ITR1? Understanding the Basics

• Balance sheet & profit and loss account – Business income/expense and asset/liability details

Also Learn: How to File ITR-2 Online for Individuals: Multiple Sources of Income

• Capital gains income (if any): Upload details of sales of capital asset (e.g., land, building, shares) at profit or loss.

Also Learn: What is ITR-1? A Comprehensive Guide for Salaried Individuals

• Other income sources: Interest from savings, fixed deposits, rental income, etc.

• Deductions and exemptions: Deductions under Sections 80C, 80D, 80G, 80E, etc. (e.g., LIC, PPF, home loan interest).

Also Learn: Different ITR Forms In INDIA: A Comprehensive Guide

• Computation of total income: Claim set off of any losses carried forward and computed total income.

Step 4: Verify tax liability

•  The portal will auto-calculate your tax liability based on the provided details.
• Check for any additional tax payable or refund eligibility.

Step 5: Pay tax (if applicable)

• If there’s any outstanding tax, generate a Challan ITNS 280 and pay online through net banking or debit card.

Step 6: Preview and submit ITR

• Review all entered details carefully.
• Click ‘Proceed to Verification’ and select e-verification mode.

Step 7: E-Verify the return

You can e-verify using:

• Digital Signature Certificate (“DSC”)
• Electronic Verification Code (“EVC”) through bank account
• Aadhaar OTP
• If not e-verifying, you must send a signed ITR-V to CPC Bangalore within 120 days.

Also Learn: Which ITR Form To File: Guide To Individual & Businesses

Frequently asked questions (“FAQs”)

1. Can we file ITR 5 offline?

No, ITR 5 must be filed online through the Income Tax portal. However, the ITR V verification form can be submitted offline (via post) if DSC or EVC is not used.

2. Can NRIs file ITR 5?

No, NRIs (Non-Resident Indians) cannot file ITR 5 because this form is specifically meant for Partnership Firms, LLPs, AOPs, and BOIs operating in India. However, if an NRI is a partner in an

Indian partnership firm or LLP, the firm/LLP must file ITR 5, while the NRI partner must file ITR 2 or ITR 3 (depending on their income sources in India)

3. How much time does it take to file ITR 5?

The time required to file ITR 5 depends on the complexity of financial records and tax computations.

• If all documents are ready: Filing can be completed within 60-120 minutes using the Income Tax e-Filing portal.
• If financial statements need preparation: It may take a few days to a week, especially if tax audits are required.
• Processing time by the Income tax department: Usually 7-15 days, but refunds (if applicable) may take longer.