ITR-5 and ITR-6 Filing for Firms, LLPs and Companies

Which form applies

ITR-5 is used by partnership firms, limited liability partnerships, associations of persons, bodies of individuals, business trusts, investment funds, estates and artificial juridical persons. ITR-6 is used by companies, except those claiming exemption in respect of income from property held for charitable or religious purposes.

The choice is rarely difficult, but the consequences of getting it wrong are real: a return filed on the wrong form can be treated as defective, and the notice arrives after the due date has passed.

ITR-5 — firms, LLPs and AOPs

A firm or LLP is taxed as a separate assessee at the flat rate applicable to firms, with surcharge and cess on top, and there is no slab benefit. Remuneration and interest paid to partners are deductible only within the limits and conditions of section 40(b) and only where the deed authorises them — the most common adjustment we make on an incoming file is remuneration that the deed never provided for.

LLPs carry a second layer of compliance. Form 8 and Form 11 are due to the Registrar irrespective of turnover, and an LLP audit is required once contribution or turnover crosses the prescribed limits, separately from the tax audit test.

ITR-6 — companies

Every company files ITR-6 electronically under digital signature; there is no alternative verification route. The return has to agree with the audited financial statements adopted at the annual general meeting and filed with the Registrar, and with the tax audit report where one is required, because mismatches between the three are picked up automatically in processing.

A dormant company files too. Nil activity does not remove the obligation, and a year of losses that goes unreported is a year of losses that cannot be set off later.

Due dates and audit linkage

The return is due on 31 July where no audit applies and 31 October where a tax audit does; since every company is audited, ITR-6 is in practice a 31 October return. Entities required to furnish a report in respect of international or specified domestic transactions get until 30 November. The audit report must be filed before the return, and the two must carry the same figures — filing the return first, or filing on figures the auditor later changes, produces a mismatch that takes longer to fix than it took to cause.

The decisions that are actually made in the return

An entity return is not a data-entry exercise. A domestic company can opt for the concessional rate under section 115BAA by surrendering specified deductions, and the option cannot be withdrawn once exercised, so it has to be modelled against brought-forward losses, unabsorbed depreciation and any incentives being claimed. Minimum tax provisions, disallowances for late statutory payments, and set-off and carry-forward of losses all turn on choices made at the time of filing. We compute the alternatives and put the comparison in front of you before anything is submitted.

Why file through TCC

The value in an entity return is in the reconciliation — books to GST turnover, TDS to Form 26AS and AIS, the tax return to the audited accounts and to what was filed with the Registrar. We do that reconciliation before filing rather than in reply to a notice afterwards, file under digital signature ahead of the due date, and stay with the file through processing.