A Partnership Firm, whether registered or not, is required to file an Income Tax Return (ITR) each financial year under the Income Tax Act, 1961. Filing the ITR ensures compliance with tax regulations and is mandatory, even if the firm has incurred losses during the year.
The firm is taxed as a separate legal entity, and partners are taxed on the share of profit exempt under Section 10(2A). Filing ITR for a partnership firm involves disclosure of income, expenses, profit distribution, and other financial data.
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Under Indian tax law, a partnership firm is treated as a separate taxable entity, distinct from its partners. The firm's profits are taxed at the firm level, and share of profit received by partners is exempt in their individual hands under Section 10(2A).
Filing an Income Tax Return (ITR) is mandatory for all partnership firms, even if:
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