Home / Limited Liability Partnership Compliance (LLP)

Updated on 27 Oct 2021  9.00 AM IST | 4 min read

An Overview to Limited Liability Partnership Compliance

Limited liability partnership needs to maintain compliance's to avoid heavy penalties under non-compliance law. LLP's should submit/file income tax returns to the income tax department and annual returns to the ministry of corporate affairs (MCA). In the case of LLP, there is no need to audit books of accounts unless the annual turnover of an LLP is more than Rs.40 Lakhs or contribution is more than Rs.25 Lakhs.

LLP enjoys the benefit of a separate legal entity and perpetual succession. An LLP has fewer compliance requirements in comparison to a company. Limited liability partnership needs to file their annual returns in form-11 within 60 days from the end of the financial year and Statement of accounts & solvency in form-8 within 30 days from the end of 6 months of the financial year.

LLP Compliances

Statements of Accounts and Solvency - All enrolled LLPs are obliged to maintain books of accounts and to enter data regarding profit earned and other financial data pertaining to the firm on Form 8, which must be submitted annually. Form 8 must be attested by the signatures of the authorized partners and certified by a chartered accountant, a company secretary, or a cost accountant in practice. Failure to file the statement of accounts and solvency report on time may result in a fine of Rs.100 per day. Form 8 must be filed by 30th October of each fiscal year.

Annual Return Filing - Annual Returns must be filed on the prescribed Form-11. This form summarizes the LLP's management affairs, including the number of partners and their names. Additionally, form 11 must be filled by the 30th May each year.

Filing and audit requirement under the Income-tax act - As previously discussed, Limited Liability Partnerships with a turnover of more than Rs.40 lakh or a contribution of more than Rs.25 lakh are required under the Limited Liability Partnership Act, 2008 to have their books of accounts audited by practising Chartered Accountants. 30th September is the deadline for filing a tax return for an LLP must have its books audited.

Note: From AY 2021-22 (FY 2020-21), the Rs.1 crore threshold limit for a tax audit is enhanced to Rs.5 crore if the taxpayer's cash receipts are limited to 5% of gross receipts or turnover and cash payments are limited to 5% of aggregate payments under the Income Tax Act, 1961.

For LLP's that do not require a tax audit, the tax filing deadline is 31st July. Form 3CEB is required for LLP's that have entered into any international transactions with related firms or have engaged in certain domestic transactions. Form 3CEB should be certified by a chartered accountant in good standing. Limited Liability Partnerships that are required to file this form must do so by 30th November. LLPs should use Form ITR 5 to file their income tax returns. This form may be filed electronically through the income tax website using the designated partner's digital signature.

Advantages of LLP over Private Limited Company

  1. Elimination of the need to maintain Minutes books, Statutory Registers, and flexible tax rates.
  2. No, an LLP is not required to hold an annual general meeting. AGM is a once-a-year meeting of the Company's shareholders. Due to the absence of a shareholder structure in an LLP, no annual general meeting is required.
  3. A board meeting is typically associated with a meeting of the Board of Directors. An LLP does not have directors; instead, designated Partners administer the business and are held accountable for compliance's. Thus, in the case of an LLP firm, a meeting of the Board of Partners is recommended.
  4. No limit is specified for a maximum number of partners.

Documents Required For Annual Compliances For LLP

  • PAN Card
  • Certificate of incorporation
  • LLP Agreement
  • Financial Statements
  • Digital Signature of all partners.

Procedure For Annual Compliance Fulfillment

  1. Maintain proper books of accounts.
  2. Preparation & filing of balance sheet.
  3. Get your accounts certified by CA if your turnover is above Rs.40 Lakhs.
  4. Filing of form 8 and form 11 with Registrar of companies (ROC).
  5. Filing of an income tax return to the income tax department.

Major benefits of an LLP

LLP's enjoy several significant benefits, including the following:

  1. A limited liability partnership is a legal entity distinct from its partners.
  2. It can raise capital from partners, banks, and non-bank financial corporations (NBFCs).
  3. The procedure for incorporation, conversion, and dissolution of an LLP is straightforward and easy.
  4. It has assets and liabilities distinct from those of the promoters.
  5. Easy transfer of Ownership

Penalty For Non-Compliance

  • Late filing or non-filing of LLP annual return or statement of accounts & solvency before the due date will attract a penalty of Rs.100 per day.
  • LLP cannot be closed without the filing of the tax return.
  • An LLP penalty doesn’t have a maximum limit. It can be of any amount.
  • Therefore, it is best to file your LLP annual returns or statement of accounts & solvency in time to avoid heavy penalties.

Limited Liability Partnership Compliance (LLP) FAQ’S

Every LLP has to file a “Statement of accounts and solvency in form-8 with the registrar of companies every year. Every LLP is obligated to reflect the true & fair picture of their accounts by way of annual returns.
Every LLP has to mandatory file annual returns with the registrar of companies every year.
Form-8 is used to file “statement of accounts & solvency”, and form-11 is used to file annual returns.
Limited liability partnership needs to file their “annual returns” within 60 days from the end of the financial year and “statement of accounts & solvency” within 30 days from the end of 6 months of the financial year.
Late filing or non-filing of LLP annual return or statement of accounts & solvency before the due date will attract a penalty of Rs.100 per day.
Yes, by complying with the provisions of clause 58 and Schedule II of the LLP Act, an existing partnership firm can be converted into an LLP.

ROC – Filings: Form 17 must be filed along with Form 2 to convert and incorporate an LLP.

No, only private/unlisted public companies are eligible to convert into an LLP.
While it is not required to file charge details with the Registrar's office, stakeholders may do so freely.

ROC – Filing: Charge information, such as the creation, modification, or satisfaction of a charge, maybe filed as an Appendix to e-Form 8. (Interim).

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Due Dates

  • Due date for deposit of tax deducted/collected for the month of September, 2021. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan

    Oct 07th ,2021
  • Due date for deposit of TDS for the period July 2021 to September 2021 when Assessing Officer has permitted quarterly deposit of TDS under section 192, 194A, 194D or 194H

    Oct 07th ,2021
  • GSTR-7 Summary of Tax Deducted at Source (TDS) and deposited under GST laws

    Oct 10th ,2021
  • GSTR-8 Summary of Tax Collected at Source (TCS) by e-commerce operators under GST laws

    Oct 10th ,2021
  • GSTR 1 for Sep 2021 (turnover more than INR. 1.50 Crore)

    Oct 11th ,2021
  • GSTR-6 Details of Input Tax Credit (ITC) received and distributed by an Input Service Distributor (ISD)

    Oct 13th ,2021