Operating a Partnership Firm in India involves fulfilling several financial and legal responsibilities, including compliance with tax regulations. Among these, understanding the audit limit for partnership firms is crucial to ensure proper financial reporting and avoid penalties.
Partnership Firm Audit Limit Under Income Tax Act
A partnership firm must undergo a tax audit under Section 44AB of the Income Tax Act, 1961, if:
- Its turnover exceeds ₹1 crore in a financial year (for businesses).
- Its gross receipts exceed ₹50 lakh (for professionals).
- If the firm opts for presumptive taxation under Section 44AD but reports lower income than the prescribed rate and its total income exceeds the basic exemption limit.
- The audit limit extends to ₹3 crore for businesses that conduct 95% of their transactions digitally.
GST Audit Limit for Partnership Firms
- A partnership firm is required to self-certify its GST reconciliation statement if its aggregate turnover exceeds ₹5 crore in a financial year.
Income Tax Return Filing for Partnership Firms
Regardless of profit or loss, all partnership firms must file income tax returns. The partnership firm tax rate is 30%, along with a 12% surcharge if taxable income exceeds ₹1 crore. Additionally, a 4% Health & Education Cess is applicable.
Key Tax Deductions for Partnership Firms
- Interest on capital (up to 12%) is deductible.
- Remuneration paid to partners (subject to partnership deed terms).
- Salaries and commissions to working partners are deductible, but payments to non-working partners are not.
ITR Forms for Partnership Firms
- ITR-4: For firms with income under the presumptive taxation scheme.
- ITR-5: For firms not covered under presumptive taxation or requiring an audit.
Income Tax Return Filing Deadlines
- July 31st – For firms not subject to audit.
- October 31st – For firms requiring an audit.
Additional Compliance Requirements
GST Returns
A partnership firm must register for GST if turnover exceeds ₹20 lakh. The applicable returns include:
- GSTR-1 (monthly/quarterly filing of sales invoices)
- GSTR-3B (summary return)
- GSTR-9 (annual return)
- GSTR-4 (for composition scheme taxpayers)
TDS Return Filing
Partnership firms with a TAN (Tax Deduction Account Number) must file TDS returns based on their tax deductions. Common TDS forms include:
- Form 24Q – TDS on salary
- Form 26Q – TDS on non-salary payments
- Form 27Q – TDS for non-residents
EPF Compliance
A partnership firm with 10 or more employees must register for Employee Provident Fund (EPF) and file periodic EPF returns.
Accounting & Bookkeeping Requirements
A partnership firm must maintain books of accounts if:
- Turnover exceeds ₹25 lakh or income exceeds ₹2.5 lakh in any of the preceding three years.
Ensure Seamless Compliance with SAPTAX HUB LLP
Managing tax compliance can be challenging, but SAPTAX HUB LLP simplifies the process for partnership firms. Our expert team provides end-to-end support for: ✅ Income Tax Return Filing
✅ Tax Audit & Advisory
✅ GST & TDS Return Filing
✅ EPF Compliance & Bookkeeping
With SAPTAX HUB LLP, ensure your partnership firm stays legally compliant and financially sound. Contact us today to streamline your tax compliance effortlessly!
