As per the provision of the Income Tax Act, Partnership firms are also required to file income tax returns like LLPs and Companies registered in India. For the establishment of a partnership firm, no heavy legal formalities are required. It is very easy to set up a partnership firm where two or more people can work for their mutual benefit.
In partnership firm partners have unlimited liability if the profit of the firm is not sufficient to settle their losses than they are liable by their personal assets. Under Income Tax Act, a partnership firm is defined as “Persons who have entered into a partnership with one another are called individually “partners” and collectively “a firm”, and the name under which their business is carried on is called the “firm name”. Partnership firms are required to file income tax returns in form ITR 5 each financial year. To file the income tax return of a partnership firm, a book of accounts must be maintained and a tax audit must be conducted if turnover exceeds the threshold limit of getting the accounts audited u/s 44AB of Income Tax Act.
- If tax audit is not required in Partnership firm then it must file the ITR by 31st
- If tax audit is required in Partnership firm then it must file the ITR by 30th of September.
As per the provision of Income Tax Act, it is mandatory to all Partnership Firm to get its books of accounts audited by Practicing Chartered Accountant in these conditions are under as follows:
- If total sales, turnover or gross receipts exceeds Rs. 1 Crore in any previous year, in case of business;
Note: Provided that this section is not applicable to the person, who opts for presumptive taxation Scheme under Section 44AD and his total sales or turnover does not exceed Rs 2 crores.
- If total gross receipt of professional firm exceed Rs 50 lakhs in any previous year.
The threshold limit will be amended as applicable to the Assessment Year
Partnership firms are required to file income tax return in form ITR 5.
Basic Features to Read before starting private limited company
Private company is required to add the word “Private limited” or “Pvt. Ltd.” to end of its name. Private company should have at least two member and two directors. Private company have right to issue debentures to any number of persons.
Features of Public Limited Company
MCA provides the facility for incorporation of public limited company. For incorporation, firstly apply for name through RUN (Reserve Unique Name) on MCA portal. After availability of name from ROC we should file incorporation form i.e. Spice 32, INC 33(for eMOA), INC 34(for eAOA), .