ITR-5 for LLPs: the Tax Half of the LLP Year, Without the Company-Law Noise

Most LLP partners I meet can recite two dates without thinking: Form 11 by 30 May, Form 8 by 30 October. Then I ask about the income-tax return and the room goes quiet. The MCA half of the year gets a checklist, a reminder and a filing partner. The tax half gets handled "somewhere in October, by the CA, probably." That vagueness is expensive, because the LLP's tax life runs on its own rules — a different form, a different rate, a different audit trigger and, this year, a moved deadline. This post covers only that tax half. The company-law half — Form 11, Form 8, the LLP Act audit — lives elsewhere, and I will point you to it rather than repeat it.

ITR-5 is the LLP's return

An LLP files its return of income in Form ITR-5. That form is built for entities, not people: partnership firms, LLPs, associations of persons, bodies of individuals, co-operative societies, local authorities, business trusts and investment funds all file on it. Individuals and HUFs have their own forms, companies file ITR-6, and trusts and institutions that file under sections 139(4A) to 139(4D) use ITR-7. If anyone suggests filing your LLP's return on an individual form because "the partners are the real owners anyway," stop them. An LLP is taxed as a separate unit, and its return is ITR-5 or it is wrong.

The form asks for what an entity return should ask for: the balance sheet, the profit and loss account, depreciation schedules, and the details of partners and their shares. It is a fuller document than Form 8, and it is read by a different department for a different purpose. Which brings me to the picture worth holding in your head: your LLP is like a shop that stands on one plot but answers to two inspectors — the Registrar reads the MCA filings to know the shop exists and who runs it, while the Income-tax Department reads ITR-5 to know what the shop earned and what it owes. Same premises. Different rulebooks, different dates, and neither inspector accepts the other one's paper.

What the LLP itself pays: a flat 30%

There are no slabs for an LLP. No basic exemption, no gentler rate on the first few lakh. The LLP pays tax at a flat 30% of its total income.

So the working rate is 31.2% up to ₹1 crore of income, and roughly 34.94% above it. Partners sometimes ask why the LLP cannot take the 22% route they have read about for companies. It cannot. Sections 115BAA and 115BAB are company provisions. An LLP pays 30%, and planning for an LLP means planning inside that fact — through what the LLP legitimately deducts, which is where sections 40(b) and 194T come in below.

The AMT check most LLPs skip

If your LLP claims the heavier deductions — profits from a unit in a special economic zone under section 10AA, investment-linked deductions such as section 35AD, or the Chapter VI-A deductions — run the alternate minimum tax test before you celebrate the low tax bill. Under section 115JC, where the regular tax works out lower, the LLP pays 18.5% of its adjusted total income instead. The adjusted total income is the total income with those specified deductions added back, as section 115JC(2) lays down. The excess over regular tax is not lost: it becomes AMT credit, carried forward and set off in later years when regular tax exceeds the AMT figure.

Most small LLPs never meet AMT, because they claim none of the deductions that trigger it. The ones that do meet it are usually claiming something substantial — which is exactly when nobody in the room remembers to run the second computation. Run it anyway. It takes ten minutes and it is far cheaper than an adjustment notice.

What the LLP can deduct for its partners: section 40(b)

An LLP's biggest legitimate deductions are usually the payments it makes to its own partners — remuneration for the partners who work in the business, and interest on the capital they have put in. Section 40(b) allows both, inside firm limits, and disallows whatever crosses them.

Those remuneration figures are the revised ones. The Finance (No. 2) Act, 2024 doubled the old limits with effect from 1 April 2025 — the first slab used to run on ₹3,00,000 of book profit with a ₹1,50,000 floor. If your LLP agreement still carries the old numbers in its remuneration clause, the deduction follows the agreement and the section together, so the clause deserves a fresh look. Three conditions ride on every rupee: the payment must be to a working partner, it must be authorised by the LLP agreement, and it must relate to a period after that authorisation exists. Remuneration paid outside the agreement is not a grey area. It is a disallowance waiting for an assessing officer.

And since 1 April 2025, these payments carry a TDS duty. Under section 194T, the LLP deducts tax at 10% on salary, remuneration, commission, bonus or interest paid or credited to a partner, once the total for the year crosses ₹20,000. Partners who were used to receiving gross amounts now receive them net, with the credit showing in their own tax records. Build that into your cash planning rather than discovering it at the year-end reconciliation.

What the partners pay personally

The partner-side rule is short and widely misunderstood. A partner's share in the total income of the LLP is exempt under section 10(2A). The LLP has already paid tax on that income at 30%, and the same profit is not taxed a second time in the partner's hands. But remuneration and interest are different money. To the extent those were allowed as a deduction to the LLP under section 40(b), they are taxed in the receiving partner's hands as business income under section 28(v).

So a partner can receive three things from the same LLP in the same year and face three treatments in the return: share of profit — exempt; remuneration — taxable; interest on capital — taxable. The confusion I see most often is a partner declaring nothing because "the LLP already paid the tax." The LLP paid tax on its income. It did not pay the partner's tax on remuneration and interest. Keep the LLP's computation and each partner's computation side by side before anyone files.

Two audits, two laws — do not merge them

This is the distinction that decides your due date, so get it clean.

An LLP with ₹60 lakh of turnover needs the LLP Act audit and files audited accounts with Form 8 — but it has no section 44AB tax audit, because ₹1 crore was never crossed. An LLP with ₹3 crore of turnover and heavy cash handling can need both. The tests are independent, the thresholds are an order of magnitude apart, and clearing one tells you nothing about the other. We have a separate guide on when an LLP needs an audit under the ₹40 lakh / ₹25 lakh test — read it for the MCA half, and use this post for the tax half.

The due date, stated precisely for this year

Section 139(1), through the table in Explanation 2, puts an LLP whose accounts are required to be audited — under the Income-tax Act or under any other law — in the 31 October class. Note the words "or any other law." An LLP that needs only the LLP Act audit, and no tax audit, still sits in the October class, because its accounts are audited under another law. An LLP with no audit of either kind is due by 31 July.

For assessment year 2026-27, the Board then moved the October date. CBDT Circular No. 07/2026, dated 28 September 2026, issued under section 119, extended the return due date for the audit class — the persons at serial number 2 of that Explanation 2 table — from 31 October 2026 to 21 November 2026. The same circular moved the specified date for furnishing the audit report to 21 October 2026. Two honest qualifications. The circular does not cover transfer-pricing cases: where a section 92E report in Form 3CEB is required, the return stays at 30 November 2026 and the circular gives no extra time. And the circular says nothing about interest under section 234A, so do not read the extension as an interest holiday.

As I write, the 21 October audit-report date has passed and the 21 November return date is close. If your audit report is still not furnished, furnishing it now and filing the return by 21 November is the only sequence that limits the damage.

Filing mechanics that trip people up

DSC is not optional in audit cases. Where the LLP's accounts are liable to audit under section 44AB, the return must be furnished electronically under a digital signature — the paper route is closed for such cases, and an EVC will not substitute. The return is signed by a designated partner, so that partner's DSC must be valid, registered on the portal and working before deadline week, not during it. Our Form 11 annual return guide makes the same point for the MCA side: signature problems are a March problem to solve, not an October surprise.

There is no presumptive shortcut. Sections 44AD and 44ADA are not open to LLPs. Whatever the turnover, the LLP computes its actual income from its books. A partner who has seen a proprietor friend file on a deemed-profit basis should not expect the same door to exist here.

Late filing burns losses. If the LLP has a business loss or a capital loss it wants to carry forward, the return must be filed within the section 139(1) time. A belated return can still be filed, and tax can still be paid — but the loss stays behind. For a young LLP that lost money in year one and expects profits in year three, that single missed date can cost more than every late fee in this article combined.

Keep the two halves on two checklists

The LLP year is genuinely two years running in parallel: the MCA year of Form 11 and Form 8, and the tax year of ITR-5. Partners who run one combined checklist keep filing the wrong thing on the wrong date with complete confidence. Run them separately, with the tax audit test and the LLP Act audit test checked independently each April, the section 40(b) clause in the agreement read once a year, and the Circular 07/2026 dates — audit report by 21 October 2026, return by 21 November 2026 — pinned to this season's calendar. If you would rather hand the tax half over with the MCA half in one engagement, our annual filing of LLP service covers ITR-5 alongside Form 11 and Form 8, with the audit position checked before the deadlines start deciding for you.