Article explains Registration Procedure Taxation of Partnership Firms /LLP which includes Income Tax Rate applicable and Provisions related to

-Interest and Remuneration to Partners/Designated Partners, Conditions for assessment as a firm, Partners’ assessments, Losses of the firm.

-Due dates for filing return of firm, Allowability of remuneration and interest vis-a-vis presumptive .

-ITR Filing For Partnership Firm

-Compliance  Each Year

Image 1. Compliance for partnership Firm i.e. Life Cycle of Partnership FirmI. Rate of Income tax applicable to Partnership Firm / LLP

Image 2. Rate of Income tax applicable to Partnership Firm LLP

  • The Partnership Firm ( State of Punjab)  can be registered online at

II.Method OF Calculating PGBP income Of Partnership Firm

Particulars Amount
Net Profit as Profit & Loss Account Year ending 31.03.20xx XXX
Add/(Less): Income Assessable under Other Heads of Income XXX/(XXX)
Add: Expenses Admissible but not Debited to Profit & Loss Account XXX
Less: Expenses Inadmissible but Debited to Profit & Loss Account XXX
Add/(Less) : Adjustments as per Income Computation & Disclosure Standards XXX/(XXX)
Profit As per Income Tax Act 1961 XXX

 The  PGBP computation  of Income of partnership firm is alike to Computation of PGBP income for Individuals Subject to Maximum capping in case of few expenses. Some of which are as follows.

III.Remuneration  To  Partners/Designated Partners

Major Things to Be Taken Care of

1.Payment of Remuneration to a non-working partner will not be allowed as a deduction.

2.. A ‘working partner’ is an individual who is actively engaged in conducting the affairs of the business or profession of the firm.

Maximum Salary Allowed :

a. On the first 3,00,000 of book profits or in case of a loss

a. Rs. 1,50,000 or

b. at the rate of 90% of the book profit

c. (whichever is higher).

b. On the balance of book profits at the rate of 60% 

IV.Interest To Partners/Designated Partners

Image 3. Interest To Partners Designated Partners



VI. Timeline : Every Year to Year  Action Plan 

1. Advance Deposit Of Taxes During The Year

Due Date Advance Tax Payable
On or before 15th June 15% of advance tax
On or before 15th September 45% of advance tax
On or before 15th December 75% of advance tax
On or before 15th March 100% of advance tax

2. Prepare Final Accounts Year Ending 31/03/20xx

  • Closing of Year End accounts
  • Includes Preparation of
  • Balance Sheet
  • Profit And Loss Account
  • Separation of Personal Expense from Business Expenses
  • Finalization of Records kept as an evidence of Existence of each transaction.

3.Filling of ITR Form And Creation of XML File

  • After First two steps being done , most important step is to create the XML file Ready to be upload.
  • As per Nature of Business and Types of Assessess the ITR Forms are differentiated .For Partnership Firms
  • ITR – V

VII. Overall General Timeline For Partnership Firm Compliance WRT To Income Tax Act , 1961  for Partnership Firm

Image 5. Overall General Timeline For Partnership Firm Compliance WRT To Income Tax Act , 1961 for Partnership Firm

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Qualification: CA in Practice
Location: Jalandhar, Punjab, IN
Member Since: 12 Dec 2018 | Total Posts: 8

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