LLP Compliances

LLP Compliances

Compliance for LLP

Limited Liability Partnership (LLP) is a type of business entity sharing feature of a partnership firm of a company. LLP is regulated by the Registrar of Companies, Ministry of Corporate Affairs. LLP is a legal entity, separate from its partners and it has perpetual succession. Some of the major benefits and powers enjoyed by LLPs are the following:

  • Separate legal entity.
  • Buying, Selling and Holding of movable, immovable, tangible or intangible assets.
    Powers to sue and be sued.
  • Power to open bank account.
    Power to employ person.
    Power to enter into all types of legal contract.
    In line with the power, all LLPs are required to maintain compliance and file certain statutory filing with the Government each year. We look at the major compliance requirements for an LLP.

Books of Account

All LLPs must maintain proper books of account relating to its affairs each year on cash or accrual basis. The book of accounts must be kept as per double entry systems of accounting at the registered office. In case of LLPs with a turnover of more than Rs.40 lakhs or capital of over 25 lakhs, the accounts must be audited by a Chartered Accountant.

Any LLP that does not comply with the provision of the Act can be punished with a fine of not less than Rs.25000 and to a maximum of RS. 500,000. Further, the designated partner could be punished with a penalty of RS. 10,000 and RS. 100,000 for non-compliance.

Annual Return Filing

An LLP will have to file 2 types of MCA annual returns each financial year, namely Form 8 & Form 11.Form 8 must be filed within 30 days from the end of the 6 months of the financial year along with some prescribed fee.

Form 8

This must be digitally signed by 2 designate partners and it must be certified by a chartered accountant/company secretary/cost accountant. Form 8 has two parts:

  • Part A – Statement of Solvency
  • Part B – Statement of Accounts, Statement of Incomes & Expenditures

The penalty for not filing this form would be Rs. 100 per day until it is compiled.

Form 11

Form 11 contains details of number of the partners, total number of partners, total contribution received by all partners, details of body corporate as partners and summary of partners. All LLPs should file this form within 60 days from the closure of the financial year with the prescribed fee. Hence, the due date for filing LLP Form 11 is 30th of May each year.

An LLP cannot be wound up or closed until all the annual returns are filed. Hence, it is important to file LLP Annual Return on or before the due date to avoid penalty.

Income Tax Return Filing

All LLPs registered in India are required to file income tax returns each year, irrespective of revenue or profits. Hence, even an LLP that is dormant, not having undertaken any transaction must file income tax return.

Maintenance of Documents

All LLPs are required to maintain its incorporation document, names of partners and changes made, proof of fee payment, statement of account & solvency & annual return filed by LLP with the Registrar at its registered office. The above records should be readily made available for inspection at the request of concerned authorities.

Important LLP Due Dates

The following filings are mandatory for all LLPs irrespective of activity. In addition to the below, a LLP having GST registration would have to file GST returns every month.

Form

  • Form – 11 (Annual Return)
  • Form – 8 (Statement of Accounts)
  • Income Tax Return (ITR-5 Form)

Due Date

  • 3oth May
  • 30th October
  • 31st July – If tax audit not required.
    30th September – If tax audit required.

Authority

  • Ministry of Corporate Affairs
  • Ministry of Corporate Affairs
  • Income Tax Department

Penalty for Late Filing

If there is a delay in filing Form 8 and 11 of the LLP, penalty of RS. 100 per day per form is payable from the due date of filing return till the actual date when the return is filed.

In case of late filing income tax return, a penalty of Rs.5000 would be applicable for returns late filed between 1st August and 31st December of the assessment Year. A penalty of Rs.10,000 will be applicable on returns filed after 31st December of the same assessment year.