💼 LLP Income Tax Return (ITR) Filing – Complete Guide

1️⃣ What is an LLP Income Tax Return?

A Limited Liability Partnership (LLP) is a business structure combining the benefits of a partnership and a company.

An LLP Income Tax Return (ITR) is the annual return filed by an LLP to declare its income, expenses, and tax liability to the Income Tax Department.

• Governed by Income Tax Act, 1961

• LLPs are taxed as partnership firms for income tax purposes

• Mandatory for LLPs with business income or annual turnover exceeding prescribed limits

2️⃣ Who Should File LLP ITR?

• All LLPs registered under the LLP Act, 2008

• LLPs earning business or professional income

• LLPs with foreign income or assets

• LLPs claiming deductions under Chapter VI-A

• LLPs with annual turnover exceeding ₹40 lakh (audit threshold for professional receipts may differ)

Filing is mandatory even if the LLP does not earn profit.

3️⃣ LLP Income Sources

LLP income is taxed at a flat rate of 30% + surcharge + cess (same as partnership firm)

4️⃣ Deductions for LLPs

5️⃣ Choosing the Correct ITR Form

Filing the wrong form may result in rejection or processing delay.

6️⃣ Documents Required for LLP ITR

7️⃣ Step-by-Step Filing Process

Step 1 – Collect Documents

• PAN, Aadhaar, LLP agreement, books of accounts, bank statements, Form 26AS, TDS certificates

Step 2 – Compute Total Income

• Business profits minus allowable deductions

• Add other income like capital gains, interest, rent

Step 3 – Claim Deductions

• Business expenses under Sections 30–37, 36

• Depreciation as per IT Act

Step 4 – Pay Tax

• LLP taxed at 30% flat rate

• Advance tax if tax liability exceeds ₹10,000

Step 5 – File ITR Online

• ITR-5 via Income Tax e-Filing portal

Step 6 – Verification

• e-Verify via Aadhaar OTP, net banking, or bank account

• Physical verification by sending signed ITR-V to CPC Bangalore

Step 7 – Audit (if applicable)

• Section 44AB audit if turnover/professional receipts exceed:

  • Business: ₹1 crore

  • Profession: ₹50 lakh

• Audit report: Form 3CB/3CA + Form 3CD

Step 8 – Acknowledgment & Refund

• ITR acknowledgment generated post-verification

• Refund credited to bank account linked with PAN

8️⃣ Tax Audit for LLPs (Section 44AB)

• Mandatory if LLP turnover exceeds ₹1 crore for business or ₹50 lakh for professional receipts

• Forms required:

  • Form 3CB / 3CA – Audit report

  • Form 3CD – Detailed schedule of income, expenses, TDS, capital assets, partner remuneration

• Deadline: 30th September of assessment year

• Non-compliance results in penalty under Section 271B

9️⃣ Advance Tax & Self-Assessment

• LLP must pay advance tax in installments:

  • 15% by 15 June, 45% by 15 Sept, 75% by 15 Dec, 100% by 15 Mar

• Interest applies under Sections 234B/C if not paid on time

🔟 Common Mistakes to Avoid

1️⃣1️⃣ Advisory Draft – LLP ITR

To: [Client Name]
Date: __________

Subject: Advisory on LLP Income Tax Return Filing

Dear [Client Name],

This advisory provides guidance for filing Income Tax Return for your LLP for FY [20XX–XX].

Recommended Actions:

1. Maintain accurate books of accounts, bank statements, invoices, and capital assets register.

2. Ensure business income, expenses, and depreciation are computed as per IT Act.

3. Compute total income including capital gains, interest, and other income.

4. File ITR-5 online through Income Tax e-Filing portal and verify within 120 days.

5. Conduct audit under Section 44AB if turnover/professional receipts exceed thresholds.

6. Pay advance/self-assessment tax timely to avoid interest and penalties.

7. Maintain all documents, ITR acknowledgment, and audit reports for at least 6 years.

Benefits: Legal compliance, proper reporting of income & expenses, avoidance of penalties, smooth audits, and optimized tax liability.

Warm regards,
[Consultant Name]
[Designation / Organization]

🔹 Useful Links

• Income Tax e-Filing Portal

• ITR Forms & Utilities

• Section 44AB – Tax Audit

🔹 Additional LLP Income Tax Information (Not Covered Earlier)

1️⃣ Tax on LLP Partners’ Share

• LLP itself pays tax at 30% on total profit.

• Partners are generally not taxed on profit received from LLP under Section 10(2A), except:

  • If a partner receives salary, interest, or guaranteed payment, it is taxable in their hands under Income from Business/Profession.

• Guaranteed Payments to Partners (like salary to working partners) are:

  • Deductible for LLP

  • Taxable for partners

  • Reported under ITR-3 or ITR-2 for individual partners

2️⃣ Alternate Minimum Tax (AMT) Applicability

• LLPs are exempt from AMT, unlike private limited companies.

• This is advantageous for LLPs claiming deductions (e.g., depreciation, Section 35/36 deductions).

3️⃣ Accounting Standards & Books of Accounts

• LLP must maintain books as per Accounting Standards for audit purposes if turnover exceeds threshold.

• Recommended format: Trial Balance → P&L → Balance Sheet → Notes

• Depreciation must be computed under Income Tax WDV rules, not just accounting depreciation.

4️⃣ Loss Carry Forward & Set-Off Rules

Important: Loss carry forward is lost if ITR not filed on time.

5️⃣ LLP Tax Audit – Nuances

• Mandatory if turnover > ₹1 crore or professional receipts > ₹50 lakh

• Audit forms:

  • Form 3CB – if audited under accounting standards

  • Form 3CA – if already audited for company purposes

  • Form 3CD – detailed audit report with 60+ clauses

• Deadlines:

  • ITR filing: 30th September (with audit)

  • Without audit: 31st July

• Audit includes:

  • Verification of books, vouchers, TDS, GST

  • Partner capital contributions & withdrawals

6️⃣ Foreign LLP Income / NRI Partners

• LLP with foreign partners must disclose:

  • Foreign contribution / capital

  • Profit sharing ratio

  • Income repatriated to NRI partners

• Report in Schedule FA in ITR-5

• Must comply with FEMA / RBI guidelines

7️⃣ Advance Tax & Interest

• LLPs liable to pay advance tax if estimated tax > ₹10,000

• Installments: 15th June – 15th March

• Interest under Sections 234B & 234C for late or short payment

8️⃣ GST & LLP Income Tax Interaction

• LLP registered under GST must:

  • Align books of accounts for both GST & IT

  • Avoid double reporting of income

  • Ensure GST audit does not conflict with LLP tax audit

9️⃣ Penalties & Legal Compliance

🔟 Advisory Draft – Additional LLP Income Tax Points

To: [Client Name]
Date: __________

Subject: Advisory on LLP Income Tax Compliance & Filing

Dear [Client Name],

This advisory provides additional guidance for LLP income tax compliance, beyond basic ITR filing:

Recommended Actions:

1. Ensure all partner remuneration, guaranteed payments, and interest are properly accounted and taxed in the respective partner’s ITR.

2. Maintain books as per Accounting Standards; record depreciation under Income Tax WDV rules.

3. Conduct mandatory tax audit if turnover exceeds ₹1 crore or professional receipts > ₹50 lakh.

4. Pay advance tax timely to avoid interest under Sections 234B/C.

5. For LLPs with foreign partners or foreign income, report in Schedule FA and comply with FEMA regulations.

6. Ensure loss carry forward & set-off is correctly reported.

7. Reconcile GST returns and income tax records to avoid discrepancies.

8. Retain all books, vouchers, bank statements, audit reports, and ITR acknowledgments for at least 6 years.

Benefits: Legal compliance, reduced penalties, proper partner taxation, accurate audit reporting, and optimized tax planning.

Warm regards,
[Consultant Name]
[Designation / Organization]