This article is written by Lalit Rajput, Company Secretary. The article covers the Mandatory Compliances to be followed by an LLP under Registrar of Companies, Ministry of Corporate Affairs, mentioned under LLP Act, 2008 and Income Tax Act, 1961 including Tax audit provisions.  Some key points are also given regarding LLP.

Definition(s)

Limited Liability Partnership (LLP) u/s 2(n) of LLP Act 2008:

“Limited Liability Partnership” means a partnership formed and registered under Limited Liability Partnership Act, 2008.

Foreign Limited Liability Partnership (FLLP) u/s 2(m) of LLP Act 2008:

“Foreign Limited Liability Partnership” means a limited liability partnership formed, incorporated or registered outside India which establishes a place of business within India;

In general terms, LLP is a Corporate entity and governed by the laws and regulation prescribed by the Limited Liability Partnership Act, 2008 (LLP Act, 2008).

“Any two or more persons associating for carrying on a lawful business with a view to profit may set up an LLP.”

Regulatory Authority

Registrar of Companies (ROC), Ministry of Corporate Affairs (MCA)

Mandatory Compliances for an LLP

Registered LLPs  with the Ministry of Corporate Affairs (MCA) needs to file the following mandatory compliance requirements :

  • Filing of Annual Return – LLP Form-11
  • Filing Statement of Account & Solvency – LLP Form-8

   (Statement of Statement of the Accounts/Financial Statements)

  • Filing of Income Tax Returns

Brief Overview of the Mandatory Compliances

Filing LLP Annual Return

Annual Return or Form 11 is a summary of an LLP’s Partners and an indication of change in the management.

Every LLP is required to file Annual Return in Form 11 to the Registrar within 60 days of closer of financial year i.e. has to be filed on or before 30th May every year.

Filing of Statement of Account & Solvency

(Filing of Annual Accounts/ Statement of Accounts/ Financial Statements/ P&L & Balance Sheet)

  1. LLP must maintain proper books of account. The accounts may be on cash basis or accrual basis.
  2. Statement of Solvency (Accounts) needs to be prepared every year ending on 31st March.
  3. LLP Form – 8 should be filed with the Registrar of Companies on or before 30th October every year.
  4. It should be noted that LLPs / FLLPs whose annual turnover exceeds Rs. 40 lakh or partner’s obligation of contribution exceeds Rs. 25 lakh are required to get their accounts audited by the auditor of the LLP/ FLLP mandatorily.

Tabular classification of Mandatory ROC Return of LLP

Sl. No. E-Form Due Date
1. Annual Return (Form 11) within 60 days of closer of financial year

(For F.Y.  2018-19 due date is

30-05-2019)

2. Statement of Account & Solvency (Form 8) on or before 30th October every year

(For F.Y.  2018-19 due date is

30-10-2019)


Filing of Income Tax Return

LLP can file its return of income in ITR 5. it is mandatory for LLP to file return of income electronically under digital signature if its accounts are required to be audited under section 44AB.

Sl. No. Income Tax Return Particulars Due Date
 

1.

In case audit is not required

(Those LLPs whose annual turnover does not exceed Rs. 40 lakh or partner’s obligation of contribution exceeds Rs. 25 lakh are required to file their Income Tax. They are not required to get their accounts audited by their Auditor)

 

31st July of every year

 

2.

In case an audit is required

(Those LLPs whose annual turnover exceeds Rs. 40 lakh or partner’s obligation of contribution exceeds Rs. 25 lakh are required to file their Income Tax. They are required to get their books audited under the Income Tax Act.)

 

30th September of every year

 

3.

LLPs involved in international transaction

(LLPs that entered into an international transaction with associated enterprises or undertook certain Specified Domestic Transactions are required to file Form 3CEB. Form 3CEB must be certified by a Chartered Accountant.)

 

30th November of every year

Tax Structure of LLP for F.Y. 2018-19 & A. Y. 2019-20

The Income Tax rate for LLPs is 30% (flat):

Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where the total income exceeds Rs. 1 crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds Ra. 1 crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs. 1 crore rupees by more than the amount of income that exceeds Rs. 1 crore rupees).

Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4% of such income-tax and surcharge

Alternate Minimum Tax: 

Tax payable by LLP cannot be less than 18.5% (increased by Surcharge and HEC) of “adjusted total income” as per section 115JC.

Penalty or Consequences for not filing Form 11 and Form 8

  • For LLP per day penalty of Rs. 100 till the filing is completed. (Separately for both forms) So for example: If the Form 11/ Form 8 of your LLP is not filed within the due dates and suppose the delay is of 10 days for each form then the Government penalty fees will be Rs. 2000 in total i.e.: “Rs. 1,000 (i.e. @ Rs. 100 per day for 10 Days) for Form 11 &  Rs. 1,000 (i.e. @ Rs. 100 per day for 10 Days) for Form 8”
  • For Designated Partner: From Rs. 10,000 to Rs. 100,000 Penalty
  • ROC can issue Notice to LLP and initiate legal proceedings (like strike off).

Privileges for LLP in comparison to a Private Limited company

  • Exemptions from maintenance of Minutes book, Statutory Registers, and flexible tax rates etc.
  • No, AGM is not required for an LLP. AGM is a once in a year meeting for Shareholders of the Company. As there is no concept of shareholding in an LLP, no AGM is to be held.
  • Board meeting is generally associated with a Board of Directors meeting. There are no directors involved in an LLP, instead designated Partners run the business and are held responsible for compliances. Hence, Board of Partners meeting is suggested in case of an LLP firm.
  • There is no limit on maximum number of partners.

Some key points about LLP

  1. Can an existing partnership firm be converted to LLP?

Yes, an existing partnership firm can be converted into LLP by complying with the Provisions of clause 58 and Schedule II of the LLP Act.

ROC – Filings: Form 17 needs to be filed along with Form 2 for such conversion and incorporation of LLP.

  1. Can an existing company be converted to LLP?

Yes, any existing private company or existing unlisted public company can be converted into LLP by complying with the Provisions of clause 58 and Schedule III and IV of the LLP Act.

ROC- Filings: Form 18 needs to be filed with the registrar along with Form 2 for such conversion.

  1. Can an existing company be converted to LLP?

No, only private/unlisted public company can be converted into LLP.

  1. Financial Year of LLP

Every LLP has to maintain uniform financial year (April to March) ending on 31st March of a year.

  1. Is it mandatory to file the charge details to the registrar office?

it is not mandatory to file the charge details with the office of Registrar but the stakeholders can voluntarily file the same.

ROC – Filing: The charge details i.e. creation, modification or satisfaction of charge, can be filed through Appendix to e-Form 8 (Interim).

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