Expert Assistance

ITR 5 is the Income Tax Return form specified for a category of taxpayers who are not individuals, Hindu Undivided Families (HUF), or companies (who file ITR 6). It serves as the statutory form for these specific non-individual entities to report their total income, claim deductions, calculate their tax liability, and declare their financial position to the Income Tax Department of India.

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Who is Required to File ITR 5?

ITR 5 is primarily applicable to the following non-individual entities

• Firms (including Partnership Firms).

• Limited Liability Partnerships (LLPs).

• Association of Persons (AOPs).

• Body of Individuals (BOIs).

• Artificial Juridical Persons (AJPs).

• Cooperative Societies.

• Local Authorities.

• Estates of Deceased Persons.

• Estates of Insolvent Persons.

• Business Trusts (required to file under Section 139(4E)).

• Investment Funds (required to file under Section 139(4F)).

 

Why is Filing ITR 5 Necessary?

The requirement to file ITR 5 is rooted in the Income Tax Act, 1961. Every entity specified as a 'person' under the Act must file a return of income if their total income (before claiming certain deductions and exemptions) exceeds the maximum amount not chargeable to tax, or if they meet other mandatory filing criteria (like having specific foreign assets or claiming certain tax benefits).

Key Reasons for Filing ITR 5:

1. Legal Mandate: It is a statutory obligation for the specified entities to disclose their financial information as per the Income Tax laws.

2. Compliance: Filing ensures compliance and avoids penalties, interest, and prosecution under various sections of the Income Tax Act, such as a penalty of up to $₹5,000$ under Section 234F for late filing.

3. Loss Carry Forward: Entities can only carry forward business losses (other than unabsorbed depreciation) to future years if the return is filed within the original due date.

4. Claiming Deductions: It is essential to claim various tax deductions available to these entities under Chapter VIA and other sections of the Act.

5. Proof of Income: The filed ITR 5 acts as an official document and proof of income for various purposes, such as bank loans, visas, and tenders.

 

ITR 5 Filing Process and Structure

The ITR 5 form is a comprehensive return that requires reporting under various heads of income and contains several schedules.

 

Mode of Filing

ITR 5 must be filed electronically through the Income Tax Department's e-Filing portal. The electronic filing can be done in one of the following ways:

• Under Digital Signature Certificate (DSC): This is mandatory if the accounts of the entity are required to be audited under Section 44AB (Tax Audit).

• Under Electronic Verification Code (EVC): This is an alternative option for entities whose accounts are not required to be audited.

• Transmitting data electronically and submitting ITR-V: The ITR-V (Income Tax Return Verification Form) must be printed, physically signed, and sent by ordinary or speed post to the Centralized Processing Centre (CPC) in Bengaluru within the specified time limit (typically 30 days) of e-filing.

Note: ITR 5 is an annexure-free form. You should not attach any documents (like Form 16/16A, Balance Sheet, etc.) to the return itself, though you must keep all supporting documentation ready for any future scrutiny or assessment.

 

Key Components/Schedules of ITR 5

The ITR 5 form is structured into different parts and schedules to capture all necessary financial information:

1. Part A – General Information: Basic details like Name, PAN, address, date of formation/commencement of business, and filing status (Original, Revised, or in response to a Notice).

2. Part A – Financial Statements: Includes:

   • Part A-BS (Balance Sheet): Reporting of assets and liabilities.

   • Part A-P&L (Profit and Loss Account): Reporting of manufacturing, trading, and profit and loss for the financial year.

   • Part A-OI (Other Information): Details on audit, quantitative details (if applicable), and other general financial information.

3. Schedules (Examples): These schedules calculate income under various heads and claim deductions:

   • Schedule HP: Income from House Property.

   • Schedule BP: Computation of Income under the head "Profits and Gains of Business or Profession."

   • Schedule CG: Computation of Income under the head "Capital Gains."

   • Schedule OS: Income from Other Sources (e.g., interest, dividend).

   • Schedule DPM/DOA: Depreciation on Plant and Machinery/Other Assets.

   • Schedule VI-A: Statement of deductions allowable under Chapter VI-A (e.g., Section 80G, 80GGC, etc.).

   • Schedule MAT/AMTC: Computation of Minimum Alternate Tax (MAT) or Alternate Minimum Tax (AMT) and credit thereof (if applicable).

4. Part B – Total Income and Tax Computation: The final part summarising the total taxable income and the final tax liability, including details of Advance Tax, Tax Deducted at Source (TDS), and Self-Assessment Tax paid.

 

Due Dates for Filing

The due date for filing ITR 5 depends on whether the entity is subject to a mandatory tax audit:

• For entities whose accounts are NOT required to be audited: The due date is typically July 31st of the relevant Assessment Year.

• For entities whose accounts ARE required to be audited under Section 44AB: The due date is typically October 31st of the relevant Assessment Year.

• For entities involved in international or specific domestic transactions requiring a report under Section 92E (Form 3CEB): The due date is typically November 30th of the relevant Assessment Year.