What does a late ITR-5 cost our firm?
The charge is worked out by reference to the return and the length of the delay rather than to the tax, which is why a loss-making firm can still face a real bill for an unfiled year. There is a second cost that firms tend to discover later: the partners cannot settle their own positions until the firm's allocation is settled, so one late firm return generates amendments across every partner. We price the exposure for each open year before filing, so the partners know what is coming.
Can partners file their own returns before the firm files ITR-5?
They can, and often they must because their own deadlines do not wait, but they are then filing on an estimated share. When the firm's return is eventually filed the allocation becomes fixed, and every partner return built on the estimate has to be revisited. Where the firm is close to filing we try to hold the partners back for that reason. Where it is not, we give each partner a written estimate and the basis for it, so the later amendment is an adjustment rather than a reconstruction.
Our firm owes no tax, so why is a late ITR-5 charged?
Because the obligation being enforced is the filing, not the payment. The charge attaches to the return having been due and not delivered, so a nil or loss position removes the tax but not the exposure. This surprises firms most often in the years when they deliberately stopped trading. It is also the simplest version of the problem to clear, since a year with no tax owing has no interest accruing behind it, and the sooner the return goes in the smaller the difference between the exposure and nothing.
How much does the CRA charge a Canadian partner for filing late?
For the 2025 tax year the Canada Revenue Agency charges 5% of the balance owing plus 1% of that balance for each full month the return remains outstanding, up to 12 months. The penalty itself does not compound; interest compounds daily on what is unpaid. That matters to a partner in an Indian firm because the Canadian balance depends on the share the firm allocates, so a firm return that is late tends to push the partner into filing on an estimate and paying interest on a figure nobody has fixed yet.
We paid a partner's share before filing ITR-5 — is that wrong?
It can be, because the amount remitted and the withholding considered on it both rest on an allocation the return had not yet fixed. If the filed return produces a different share, the payment was made on the wrong figure and the position has to be corrected from both ends. Where this has already happened we reconstruct the allocation, compare it with what was actually paid out, and document the difference before filing, so the return and the remittance tell the same story.
Do our losses still carry forward if ITR-5 is filed late?
Do not assume either answer. Carrying a loss forward is conditional, and the conditions attach to the return and its timing rather than to the size of the loss, so this has to be checked for each open year before the value of filing is known. We look at it early for a practical reason: if a loss survives, the late return is worth filing for the loss alone, and if it does not, the partners' expectations for later years need resetting now rather than on assessment.
What is the Liberalised Remittance Scheme?
The Reserve Bank of India framework under which a resident individual may remit up to an annual ceiling for permitted purposes — education, medical treatment, travel, maintenance of relatives, investment in shares or property abroad — with gifts and loans to non-residents inside the same ceiling. You declare the purpose to the bank on Form A2. The ceiling and the excluded purposes are set by the RBI and have changed more than once, so the figure to work from is the one current at the date of the transfer. See Form A2 and LRS remittances.
What is RNOR status?
Resident but not ordinarily resident — a transitional category in India between non-residence and full residence, reached on the day counts after returning from a period abroad. While it lasts, certain foreign income stays outside the Indian tax base, which makes the timing of a return to India worth planning rather than leaving to chance. It is temporary, and the window is set by the day-count rules. See RNOR status.
