Does our LLP have to file ITR-5 in a loss year?
Yes. The obligation follows from what the entity is rather than from whether tax is payable, so a firm or limited liability partnership that made a loss, or made nothing, is still within it. Treating a nil position as an exemption is the commonest reason we meet a firm several years behind. There is a practical cost to skipping a loss year as well: the record of that loss lives in the return, and each partner's own position is worked out from what the firm reports.
Which return does an Indian firm with a foreign partner file?
The same one as any other firm or limited liability partnership, but the content changes. A foreign partner turns an ordinary firm return into a cross-border filing: the allocation of profit between partners, the withholding to consider when the non-resident partner's share is remitted, and that partner's treatment in their own country all follow from what this return reports. We settle the allocation before the return is filed rather than after, because the partner's home filing will be built on it.
Do I report my partnership share on my own return too?
The firm files its own return, and separately you account for your share where you are resident. The two are not alternatives. What matters is that they agree: the share reported on the firm's return is the figure your own adviser should be working from, and a difference between the two is what turns into correspondence years later. For partners resident outside India we normally issue one allocation statement per partner out of the filed return, so both filings rest on the same numbers.
Does an LLP with only foreign income still file ITR-5?
Yes. Firms and limited liability partnerships are within this return whether their income arises at home or abroad, and foreign-source income does not move the entity out of it. The foreign income changes the work rather than the obligation: it has to be characterised, allocated among the partners, and reconciled with whatever tax was paid where it arose. A firm whose only receipts come from abroad is usually the one most surprised to learn it has a filing to make.
Is withholding due when we pay a foreign partner their share?
Remittance of a non-resident partner's share is a point at which withholding has to be considered, and it is settled before the money moves rather than after. The amount being remitted comes out of the firm's return, so the two exercises are linked: an allocation fixed late leaves the remittance unsupported, and a remittance made first can turn out to have been on the wrong amount. Where a partner abroad is due funds we set the allocation, then the withholding position, then the payment.
Does an association of persons file ITR-5 as well?
This return covers firms, limited liability partnerships and associations of persons, so an entity that is genuinely an association of persons files here rather than on an individual or corporate return. The harder question is usually characterisation: arrangements described loosely as joint ventures or profit-sharing agreements are sometimes associations of persons in substance. We settle what the entity is before deciding what it files, because filing the wrong return is not cured by filing it punctually.
How does an NRI prove residence to get the treaty rate?
With a tax residency certificate issued by the country you are resident in, plus Form 10F giving the details the certificate does not carry, plus a PAN in the payer's records. The certificate has to cover the period of the payment, and the payer needs it before paying, not afterwards. Missing any of the three and the deductor is obliged to withhold at the domestic rate, which turns a rate reduction into a refund claim. See TRC against Form 10F.
How is foreign tax credit claimed in India?
By furnishing Form 67 with proof of the foreign tax — the certificate or statement from the other country's authority or payer — and by relieving the income under the specific DTAA article rather than generally. The credit is limited to the Indian tax on that income, and it is computed source by source rather than in one pool. The deadline for furnishing Form 67 has been amended more than once, so we confirm it for the year rather than assume. See foreign tax credit in India.
