What is ITR-5 form: Structure and how to file ITR-5

The ITR-5 form is an Income Tax Return form used by certain entities in India to file their income tax returns.  This blog will walk you through all the essential details about what is ITR-5 form, its applicability, how to file it, and the important deadlines you need to keep in mind. 

This form is specifically designed for firms, Limited Liability Partnerships, Association of Persons, Body of Individuals, and other entities like cooperative societies, business trusts, and investment funds. It is not applicable to individual taxpayers or companies. The ITR-5 form helps these entities report their income, claim deductions, and calculate their tax liabilities for a financial year. 

What is ITR-5 form?

ITR-5 is an income tax return form used in India, specifically designed for certain entities that are not required to file returns using other ITR forms.  

Who is eligible to file the ITR-5 Form?

The ITR-5 form is applicable for filing by the following entities: 

• Firms 
• Limited Liability Partnerships (LLPs) 
• Associations of Persons (AOPs) 
• Bodies of Individuals (BOIs) 
• Artificial Juridical Persons as per section 2(31)(vii) 
• Estates of Deceased Individuals 
• Estates of Insolvent Individuals 
• Business Trusts and Investment Funds 
• Cooperative Societies 
• Local Authorities 

However, entities required to file returns under sections 139(4A), 139(4B), 139(4C), or 139(4D) should not use this form. If you’re unsure which ITR form you need to use, consult our guide for assistance. 

What are the features of ITR-5 form?

• Detailed Information:
  • ITR-5 requires detailed information about the entity’s income, deductions, and tax calculations. 
• Online Filing:
  • It must be filed online, either through the Income Tax Department’s e-filing portal or via authorized e-filing intermediaries. 
• Digital Signature:
  • The form must be verified using a digital signature or an Electronic Verification Code (EVC). 

What are the benefits of filing ITR-5?

• Compliance:
  • Ensures that the entity complies with tax laws, avoiding legal complications. 
• Record Keeping:
  • Helps in maintaining a clear record of income and taxes, which is beneficial for financial planning and audits. 
• Financial Transparency:
  • Demonstrates financial transparency and credibility, which is important for stakeholders and investors. 
• Carry Forward Losses:
  • Enables entities to carry forward losses to subsequent years, reducing future tax liabilities. 

What is the structure of the ITR-5 Form?

The ITR-5 Form is organized into two main parts and several detailed schedules: 

Part A: General Information 

• Part A-BS: Balance Sheet as of March 31^st 2023 
• Part A-Manufacturing Account: For FY 2022-23 
• Part A-Trading Account: For the financial year 2022-23 
• Part A-P and L: Profit and Loss Account for FY 2022-23 
• Part A-OI: Other Information 
• Part A-QD: Quantitative Details 

Detailed Schedules (31 in Total) 

• Schedule-HP: Income from House Property 
• Schedule-BP: Profits and Gains from Business or Profession 
• Schedule-DPM: Depreciation on Plant and Machinery 
• Schedule-DOA: Depreciation on Other Assets 
• Schedule-DEP: Summary of Depreciation 
• Schedule-DCG: Deemed Capital Gains on Sale of Depreciable Assets 
• Schedule-ESR: Deductions for Scientific Research (Section 35) 
• Schedule-CG: Capital Gains 
• Schedule-OS: Income from Other Sources 
• Schedule-CYLA: Set-Off of Current Year’s Losses 
• Schedule-BFLA: Set-Off of unabsorbed losses from previous years 
• Schedule-CFL: Losses carried forward to future years 
• Schedule-UD: Unabsorbed Depreciation 
• Schedule-ICDS: Income Computation Disclosure Standards 
• Schedule-10AA: Deduction under Section 10AA 
• Schedule-80G: Donations under Section 80G 
• Schedule-80GGA: Donations for Scientific Research/Rural Development 
• Schedule-RA: Donations to Research Associations 
• Schedule-80IA: Deductions under Section 80IA 
• Schedule-80IB: Deductions under Section 80IB 
• Schedule-80IC/80-IE: Deductions under Section 80IC/80-IE 
• Schedule-80P: Deductions under Section 80P 
• Schedule-VIA: Deductions under Chapter VIA 
• Schedule-AMT: Alternate Minimum Tax (Section 115JC) 
• Schedule-AMTC: Tax Credit (Section 115JD) 
• Schedule-SI: Income chargeable at special rates 
• Schedule-IF: Information on Partnership Firms 
• Schedule-EI: Exempt Incomes 
• Schedule-PTI: Pass-Through Income from Business Trust/Investment Fund 
• Schedule-TPSA: Secondary adjustment to transfer price (Section 92CE(2A)) 
• Schedule-FSI: Income from outside India and Tax Relief 
• Schedule-TR: Tax Relief for those taxes paid outside India 
• Schedule-FA: Foreign assets and income 
• Schedule-GST: Turnover/Gross receipts reported for Goods and Services Tax (GST). 

Part B – TI: Computation of Total Income 

Part B – TTI: Computation of Tax Liability 

• Tax Payments 
  • Advance Tax and Self-Assessment Tax Payments 
  • Tax Deducted at Source (TDS) on Income (Forms 16A, 16B, 16C) 
  • Tax Collected at Source (TCS) Details 

• Recommended Sequence for Filing 
  • Part A 
  • Schedules 
  • Part B 
  • Verification 

What are the documents required for filing ITR-5?

Before you start the filing process, ensure you have the following documents ready: 

• Entity’s Permanant Account Number (PAN) Card 
• Partnership Deed (for firms) 
• Bank Statements 
• Profit and Loss Statement 
• Balance Sheet 
• Audit Report (if applicable) 
• Details of all deductions claimed 
• TDS certificates (if any) 

Who cannot file ITR-5 form?

The ITR-5 form is designed for specific entities, but there are individuals and entities not eligible to file this form. These include: 

• Individuals:
  • Individual taxpayers must file their returns using ITR-1, ITR-2, ITR-3, or ITR-4, depending on their income sources and other criteria. 
• Hindu Undivided Families (HUFs):
  • HUFs should use ITR-2 or ITR-3. 
• Companies:
  • Companies should file their tax returns using ITR-6 or ITR-7. 
• Persons required to file returns under sections 139(4A), 139(4B), 139(4C), or 139(4D): 
  • Section 139(4A): Trusts or institutions claiming exemptions under sections 11 or 12. 
  • Section 139(4B): Political parties. 
  • Section 139(4C): Certain specified entities like scientific research associations, news agencies, associations or institutions referred to in section 10(23A), and so on. 
  • Section 139(4D): Institutions whose income is exempt under section 10 but are required to furnish returns of income. 

What are the steps to file ITR-5 form?

• Register/Login:
  • Visit the Income Tax Department’s e-filing portal. Log in if you already have an account or register if you are a new user. 
• Select Form:
  • Choose ITR-5 from the list of available forms. 
• Fill Details:
  • Enter all required information accurately. This includes general information, balance sheet details, profit and loss account details, and tax computation. 
• Upload Documents:
  • Attach all necessary documents, including the audit report if applicable. 
• Verify:
  • After filling out the form, verify it using a digital signature or EVC. 
• Submit:
  • Once verified, submit the form. Ensure you download and save a copy of the acknowledgment receipt for future reference. 

Important deadlines and penalties for late filing? 

Filing ITR-5 after the due date can attract penalties: 

• Up to December 31: INR 5,000 
• After December 31: INR 10,000 
• For small taxpayers with a total income of up to INR 5 lakhs, the maximum penalty is INR 1,000. 

• For non-auditable entities: July 31 of the assessment year.  
• For auditable entities: September 30 of the assessment year. 

Key changes in ITR-5 for AY 2024-2025

The Income Tax Department often updates the ITR forms to incorporate changes in tax laws, introduce new schedules, or improve clarity and compliance. Here are some of the key changes in the ITR-5 form for AY 2024-2025: 

• Additional Disclosure Requirements: 
  • Turnover/Gross Receipts from GST: Enhanced reporting requirements for turnover and gross receipts as per GST returns. 
  • Additional details under Schedule FA: More detailed disclosures required for foreign assets and income from any source outside India. 

• New Schedule for Start-ups: 
  • Schedule 80-IAC: Introduction of a new schedule to claim deduction under section 80-IAC for eligible start-ups. 

• Schedule for Income Computation and Disclosure Standards (ICDS): 
  • Detailed Reporting: Enhanced reporting under Schedule ICDS to reflect the impact of ICDS on profit. 

• Changes in Depreciation Schedule: 
  • Separate Disclosure: More granular details required for claiming depreciation on different classes of assets under Schedule DPM (Depreciation on Plant and Machinery) and Schedule DOA (Depreciation on Other Assets). 

• Expanded Reporting for Exempt Income: 
  • Schedule EI: More comprehensive reporting for income not included in total income (exempt income), including agricultural income, interest, and dividends. 

• Schedule GST: 
  • New Inclusions: More detailed disclosures on turnover/gross receipt reported for GST, including any adjustments made. 

• Enhanced Compliance for Investment Funds: 
  • Schedule PTI: More detailed information required for pass-through income details from business trusts or investment funds as per sections 115UA and 115UB. 

• Changes in Set-off and Carry Forward of Losses: 
  • Schedule CFL: Updated instructions and requirements for the carry forward of current and past year losses. 

• Revised AMT Schedule: 
  • Schedule AMT and AMTC: Updated computation for Alternate Minimum Tax (AMT) and tax credit under section 115JC and 115JD, respectively. 

• Additional Verification Requirements: 
  • Digital Signature: Increased emphasis on the use of digital signatures for verification to enhance security and authenticity. 

These changes aim to ensure better compliance, more accurate reporting, and alignment with current tax laws and regulations. Taxpayers and their advisors should carefully review these updates to ensure accurate filing and avoid penalties for non-compliance. 

What are the common mistakes to avoid?

• Incorrect PAN or entity details 
• Mismatched figures between the profit and loss statement and balance sheet 
• Failing to report all sources of income 
• Ignoring the reconciliation of Form 26AS with TDS certificates 

Conclusion 

In conclusion, filing ITR-5 correctly and on time is crucial for entities like firms, LLPs, and cooperative societies to stay compliant with Indian tax laws. Understanding what is ITR-5 form, gathering the necessary documents, and following the correct procedure can make the filing process smooth and hassle-free. Always ensure to double-check the information provided to avoid any penalties or legal issues. 

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