Partnership Firm Taxation in India: Key Insights and Tax Benefits Explained

In India, Partnership Firms are taxed under the Income Tax Act, 1961 as a separate entity. The taxation of partnership firms is subject to specific provisions as provided by Income Tax Act, and here’s an overview of its working:

1. Applicable Tax Rate for Partnership Firms

The tax rate for partnership firms (including Limited Liability Partnerships or LLPs) is fixed at 30% of the firm’s total income.

For the Financial Year 2024-25, the tax rate is as follows:

2. Taxation of Partners

3. Tax Deduction at Source (TDS)

4. Filing of Income Tax Return

5. Audit Requirements

6. Presumptive Taxation Scheme (Section 44AD)

7. Deductions Available to the Firm

A partnership firm is allowed to claim various business-related deductions, including:

8. LLP vs. Partnership Firm

An LLP (Limited Liability Partnership) is a form of partnership firm but with limited liability for its partners. For taxation purposes, an LLP is treated the same way as a traditional partnership firm. However, LLPs have more flexibility and legal protections for their partners.

Conclusion

The taxation of partnership firm registration in Delhi India is straightforward, with the firm itself being taxed at a flat rate, and the partners being taxed on their share of the income. There are also tax benefits available under specific schemes like Section 44AD (presumptive taxation) for small businesses. The firm is required to comply with tax laws, including TDS, filing returns, and audits if applicable.

Please connect with Taxcellent and know more details on this or any particular area!

Taxcellent helps you in getting partnership registered along with obtaining PAN, GST and opening Current Account in Bank. Taxcellent also assist you in filing GST returns and Income Tax Returns of Partnership Firms.

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