Annual Compliance - LLP
Annual Compliance - LLP
- GST Filing
- Income Tax Filing
- Annual Return Filing
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Annual filings for Limited Liability Partnership
To ensure compliance and avoid heavy penalties under the law, Limited Liability Partnerships (LLPs) must file returns periodically. LLPs have fewer compliance requirements compared to private limited companies, but the penalties for non-compliance can be significant. For instance, non-compliance penalties for a private limited company may only be INR 1 lakh, but for an LLP, it can be as high as INR 5 lakh.
Compliances by LLP:
Limited Liability Partnerships (LLPs) are required to follow several compliance requirements to operate legally in India. Some of the major compliances by LLPs are:
Filing of LLP Form 11 – Annual Return: Every LLP must file its Annual Return in Form 11 with the Ministry of Corporate Affairs (MCA) within 60 days from the end of the financial year.
Filing of LLP Form 8 – Statement of Account and Solvency: Every LLP must file its Statement of Account and Solvency in Form 8 with the MCA within 30 days from the end of six months of the financial year.
Income Tax Return Filing: Every LLP must file its Income Tax Return with the Income Tax Department within the due date.
Statutory Audit: LLPs whose annual turnover exceeds Rs. 40 lakhs or whose capital contribution exceeds Rs. 25 lakhs must get their accounts audited by a qualified Chartered Accountant.
Tax Audit: LLPs whose annual turnover exceeds Rs. 5 crores must get their accounts audited by a qualified Chartered Accountant.
GST Audit: LLPs whose annual turnover exceeds Rs. 2 crores must get their accounts audited by a qualified Chartered Accountant.
Compliance Certificate: LLPs whose annual turnover exceeds Rs. 40 lakhs or whose capital contribution exceeds Rs. 25 lakhs must obtain a Compliance Certificate from a Company Secretary.
Disclosure of Information: LLPs must disclose information regarding their designated partners, partners, and changes in partnership or designated partners.
Record Maintenance: LLPs must maintain records of their accounts, statutory registers, and books of accounts.
Failure to comply with these requirements can lead to heavy penalties and legal consequences. Therefore, it is crucial for LLPs to adhere to these compliances to maintain compliance and operate legally in India.
The income tax rate for LLPs in India is based on the profits earned by the LLP during the financial year. LLPs are treated as a separate legal entity for tax purposes, and the profits earned by the LLP are taxed separately from the partners’ personal income.
As of the financial year 2021-22, the income tax rate for LLPs in India is 30% of the total income earned during the financial year. However, if the total income of the LLP does not exceed Rs. 1 crore, the tax rate is 25% of the total income.
Additionally, LLPs are required to pay a surcharge of 10% if the total income exceeds Rs. 1 crore but does not exceed Rs. 10 crores, and 15% if the total income exceeds Rs. 10 crores. A cess of 4% is also applicable on the total tax amount payable by the LLP.
It is essential for LLPs to calculate their tax liability accurately and pay their taxes on time to avoid penalties and legal consequences.
The procedure for LLP tax filing in India involves the following steps:
Obtaining a Digital Signature Certificate (DSC) and Designated Partner Identification Number (DPIN): The first step is to obtain a DSC and DPIN for the designated partners of the LLP.
Preparation of Financial Statements: The LLP must prepare its financial statements, including the Profit and Loss Account, Balance Sheet, and Statement of Cash Flows, for the financial year.
Getting the Accounts Audited: If the LLP’s annual turnover exceeds Rs. 40 lakhs or if the contribution of the partners exceeds Rs. 25 lakhs, the accounts of the LLP must be audited by a qualified Chartered Accountant.
Filing of Income Tax Return: The LLP must file its income tax return in Form ITR 5 with the Income Tax Department by the due date. The due date for LLP tax filing is 31st July of the assessment year for non-audit cases and 30th September for audit cases.
Payment of Taxes: After filing the income tax return, the LLP must pay any tax liability due on or before the due date to avoid penalties and interest charges.
Filing of Audit Report: If the LLP is required to get its accounts audited, it must file the audit report along with the income tax return.
Annual Compliance – LLP FAQ’s
What are the annual compliances for the LLPs?
An LLP is required to file the LLP annual return in Form 11, the financial statement of the accounts and solvency, and the income tax return.
Is Form 8 mandatory for the LLPs?
The LLP Form 8, or the statement of account and solvency, must be filed every year by all LLPs registered in India, irrespective of their turnover. It is filed with the MCA.
What are the compliances for the partners in LLP?
The partners in an LLP must comply with annual return filing with the MCA and filing the statement of accounts.
What is the compliance exemption for the LLPs?
LLPs enjoy several privileges and exemptions from maintaining minutes’ books, statutory register, annual general meeting, as well as flexible rates.
Is a board meeting held for the LLPs?
In LLPs, no Board of Directors is involved, and the designated partners run the whole business and are responsible for compliance. Thus, there is no board meeting held for the LLPs.
Why is it necessary for the LLPs to comply with the ROC Compliance?
LLPs are corporate entities governed by legal rules and procedures stated in the LLP Act 2008. Regardless of turnover, LLPs must file annual returns with details on management and financial performance. Any delay attracts a heavy penalty.