The LLP Compliance Checklist for India

A shot in the arm for ease of doing business came in the form of increased limits for classification as small & medium-sized companies (SMCs). This amendment follows a recent slew of changes made by the government in favour of LLPs.

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Running any business is hard. It requires money, time, and determination. Besides this, there is a lot of paperwork including registration, GST filings, and others that are cumbersome. However, our team of experts at Vakilsearch will help you with all legal requirements, such as filing all the mandatory forms, suggesting the right lawyer for you (if you need one), or verifying your documents. Vakilsearch helps you to avoid penalties for not filing the required forms on time. Let’s see about LLP compliance for India.

What Is an LLP?

Limited Liability Partnership (LLP) is a separate legal entity registered under the Ministry of Corporate Affairs (MCA) in India. To register an LLP, there should be two partners, with at least one of them need to be an Indian citizen and resident. The partners should take responsibility for maintaining a proper book of accounts, filing income tax returns, and filing an annual return with the Ministry of Corporate Affairs (MCA) every financial year.

Advantages of a Limited Liability Partnership:

  • In an LLP, one partner is not answerable or liable for another partner’s misconduct or negligence
  • The partners have the right to manage the business directly
  • An LLP provides limited liability protection for the owners
  • If the number of partners reduces less than 2, the sole partner can still find a new partner to fill the position
  • Post incorporation, an LLP can have limitless partners
  • If there is only one partner in an LLP, there is time to find a new one, without dissolution of the LLP
  • It is a separate legal entity
  • LLPs have assets and liabilities that are separate from that of the promoters
  • An LLP can raise funds from partners, banks, and NBFCs.

All LLPs with the MCA and need a statement of accounts and annual returns for every financial year. Whether or not the LLP has done business or achieved profit filing a return is still mandatory. There are three compulsory compliances when you own an LLP.

  1. Filing of annual returns
  2. Books of accounts
  3. Filing of income tax returns

In an LLP, a person should file two types of MCA annual returns every financial year. The two forms are Form 8 and Form 11.

Form 8

Form 8 consists of the statements of account and solvency. You should file Form 8 along with the fee within 30 days from the end of six months of the financial year, i.e. October 30. 

The fee is based on how much your LLP makes, and is broken down accordingly

Contribution of LLP  Filing fees of Form 8
Up to ₹1 lakh ₹50 
₹1,00,001 to ₹5,00,000 ₹100 
₹5,00,001 to ₹10 lakhs ₹150 
₹10 lakhs ₹200 

Two designated partners must sign the form digitally. Further, it must be certified by a chartered accountant, auditor or the accountant of the company. Form 8 consists of information related to the statement of assets of the LLP and liabilities and the statement of income and expenditure of the LLP.

There are two types in Form 8. They are:

  • Part A – statement of solvency
  • Part B – statement of accounts and statement of income & expenditure

You will have to pay the penalty of ₹100 a day if you have not filed this form.

Form 11

Form 11 consists of annual returns. The form should contain the complete details of all the partners, their contributions towards the company, etc. You should file Form 8 along with the fee, within 60 days of the financial year. The year ending for LLPs is 31 March of each year. Therefore, LLPs have to file the LLP Form 11 on or before 30 May every year.

Remember that you will be penalised if you don’t file LLP annual returns on or before the due date.

Filing of Income Tax

You have to file chartered accountant audited income taxes for any LLP whose turnover is more than ₹40 lakhs or whose capital is more than ₹25 lakhs. The deadline to file the tax return for an LLP which is required to get its books verified and reviewed is 30 September. 

Limited liability partnerships (LLPs) that need to file Form 3CEB (LLPs that have entered into international transactions) can do their tax filings by 30 November. LLPs should file their income tax returns in Form ITR 5. The form could be submitted online via the income tax website with the help of the selected partner’s digital signature. LLP tax payments can be made in physical mode through chosen banks or e-payment mode.

Books of Accounts

All LLPs must maintain proper books of account on a cash basis or accrual basis. Each year, before 31 March, the report has to be properly submitted when required. The accounts books have to be presented in the registered office when needed. In the case of LLPs with a turnover of more than ₹40 lakhs or capital of over ₹25 lakhs, the accounts must be audited by a chartered accountant.

Any LLPs that do not obey the requirements of the Act can be punishable with a fine of a minimum of ₹25,000 and to a maximum of ₹5,00,000. Further, the designated partner could be punished with a penalty of ₹10,000 and ₹1 lakh for non-acquiescence.



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