What does the term "Partnership Firm" mean?
What are the tax regulations for Partnership Firms?
- 30% of your overall income is taxed.
- Whenever taxable income exceeds one crore, there is a 12% surcharge.
- The interest earned will be increased by 12%.
- A 4% tax cessation, including surcharges, is applied to health and education.
- It’s critical to understand that, in contrast to proprietorship businesses, a partnership business has a separate legal identity from its partners.
- A partnership business is also required to pay an alternative minimum tax (AMT) at a rate of 18.5% of its adjusted total revenue, exactly like private limited corporations and LLPs.
What deductions are permitted for filing a Partnership Firm's tax returns?
- Payments of interest or compensation made to partners of a partnership business that do not follow the partnership’s rules
- The non-working partners of the company receive wages, commissions, bonuses, and other compensation.
- If the partners’ compensation has been paid in accordance with the partnership agreement, but the transactions involving the compensation date back farther than the partnership agreement.
How to file tax returns for a Partnership Firm?
Audit Requirements for Partnership Firms
- In the previous financial year, continued business activities, and overall revenues surpassed Rs. 1 crore.
- Partners having a career and earning more than Rs. Fifty lakhs in the such profession in any previous year.
- A partnership business may also be necessary to conduct an audit due to extra factors.
- If a partnership firm participates in international or certain specific domestic activities, a report in the Form 3CEB must be filed under Section 92E. Form 3CEB-requires partnership firms to file their tax returns till November 30th every financial year.
Tax Assessment of Partners
What is the deadline for filing tax returns of the partners?
- The income tax returns must be filed by July 31st if the partnership is not obliged to undergo an audit.
- The income tax returns must be filed by October 31 if the partnership must undergo an audit.