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LLP Compliance

LLP’s are 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 intangile assets.
  • Powers to sue and be sued.
  • Powers to open bank account.
  • Powers to employ persons.
  • Powers to enter into all types of legal contracts.

In line with the powers, all LLPs are required to maintain compliance and file certain statutory filing with the Government each year. In this article, 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 system of accounting at the registered office.

Any LLP that does not comply with the provision of the Act can be punishable with a fine of not less than Rs. 25,000 and to a maximum of Rs. 5,00,000. Further, the designated partner could be punished with a penalty of Rs. 10,000 and Rs. 1,00,000 for non-compliance.

Annual Return Filing

An LLP will have to file 2 types of MCA annual return each financial year, namely Form 8 & Form 11.

Form 8

Form 8 must be filed within 30 days from the end of 6 months of the financial year along with some prescribed fee. This must be digitally signed by 2 designated 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 Income & Expenditure

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

Form 11

Form 11 contains details of the number of 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 return 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.

 

LLP Annual Filings

For a Limited Liability Partnership (LLP), regular filing of returns is essential to uphold compliance standards and steer clear of substantial penalties for non-compliance. LLPs benefit from a relatively lighter annual compliance burden compared to private limited companies. Nevertheless, the potential fines for non-compliance can be significant. While a Private Limited company might face penalties of INR 1 lakh for non-compliance, LLPs could incur penalties of up to INR 5 lakh. At IndiaFilings, we understand the critical importance of adhering to these compliance requirements, and our services are tailored to assist LLPs in meeting their obligations efficiently and effectively.

Get started today to ensure your LLP’s compliance and avoid penalties.

Limited Liability Partnerships (LLPs) are recognized as separate legal entities, and therefore, they are bound by specific compliance obligations. The responsibility for ensuring compliance rests with the Designated Partners of the LLP. The key compliance requirements for LLPs include the following:

  • Maintenance of Proper Book of Accounts
  • Filing of Annual Return
  • Filing of Statement of Accounts
  • Filing of Tax Audit (If Applicable)

Ensuring compliance with these obligations not only maintains the legal status of the LLP but also helps in building transparency, credibility, and financial accountability.

LLPs must diligently maintain accurate and up-to-date financial records. These records should encompass details of the LLP’s financial transactions, profits, expenses, assets, and liabilities. Proper bookkeeping is crucial to assess the financial health and performance of the LLP.

LLPs are required to file an annual return with the Ministry of Corporate Affairs for each financial year. This annual return is submitted using Form 11, and it provides essential information. This form gathers essential details about the LLP, including the total number of designated partners, comprehensive partner information, contributions received by partners, and a summary of all partners involved.

Filing Deadline

All LLPs are required to submit Form 11 within 60 days after the conclusion of the financial year. This means that Form 11 should be filed by May 30th each year.

Importance of Timely Filing

It’s crucial for LLPs to adhere to this deadline, as failure to do so can have consequences. One significant implication is that an LLP will not be permitted to close or wind up its operations until it has filed all its annual returns, including Form 11.

Penalty for Late Filing

In the event that an LLP neglects to submit its annual filing forms within the stipulated timeframe, it will incur a penalty of Rs.100 for each day of delay performed.

Duration of Penalty

The penalty will be applicable from the due date of filing the return and will continue until the actual return is filed.

LLPs must submit a Statement of Accounts & Solvency annually, which details the financial position of the LLP, including its assets and liabilities. This statement is filed using Form 8.

Due Date

LLPs are required to file Form 8 within 30 days from the conclusion of six months after the financial year ends. This means that Form 8 should be filed within this timeframe to maintain compliance.

Signing and Certification

Form 8 can be digitally signed by two designated partners of the LLP. Additionally, it must be certified by a company secretary, chartered accountant, or cost accountant.

Form Components: Form 8 consists of two main parts:

  • Part A – The Solvency Statement: This section provides a statement of the LLP’s solvency, offering insights into its financial health and stability.
  • Part B – Statement of Expenditure & Income, Statement of Accounts: Part B contains detailed information about the LLP’s income and expenses, along with a comprehensive statement of its accounts.

Penalty for Late Filing

It’s essential for LLPs to adhere to the filing timeline for Form 8. Failure to file this form on time can result in penalties, specifically a daily fine of Rs.100.

Compliance with the filing requirements outlined in Form 8 is vital for LLPs to maintain good standing and avoid financial penalties.

Limited Liability Partnerships (LLPs) are subject to specific audit and tax filing obligations as per the provisions of the Limited Liability Partnership Act 2008, and the Income Tax Act, 1961. Here are the key requirements:

Tax Audit

Audit Requirement: LLPs with an annual turnover exceeding Rs. 40 lakhs or a contribution surpassing Rs. 25 lakhs are obligated to have their books of account audited by practicing Chartered Accountants. The deadline for filing the tax return for such LLPs is September 30th.

Note: From Assessment Year 2021-22 (Financial Year 2020-21) onwards, the threshold limit for a tax audit has been raised to Rs. 5 crore under certain conditions. This applies if the taxpayer’s cash receipts constitute less than 5% of the gross receipts or turnover and if cash payments are limited to 5% of the aggregate payments as per the Income Tax Act 1961.

For LLPs not required to undergo a tax audit, the due date for tax filing is July 31st.

International Transactions – Form 3CEB

LLPs that have engaged in international transactions with associated enterprises or have undertaken Specified Domestic Transactions must to file Form 3CEB. This form should be certified by a practicing Chartered Accountant. The deadline for LLPs obliged to file Form 3CEB is November 30th.

Compliance with these audit and tax filing requirements is essential for LLPs to fulfill their legal obligations and avoid penalties.

LLPs are also required to file their income tax return using Form ITR-5. The due date for ITR filing is July 31st unless the LLP is subject to a tax audit, in which case the deadline is extended to September 30th. The income tax return provides details of the LLP’s income, expenses, and tax liability.

LLP Annual Filing Compliance Calendar is given here for your quick reference:

Form Type Description Due Date To be filed with
Form-8 Filing of Statement of Accounts 30th October Registrar of Companies
Form-11 Filing of Annual Returns 30th May Registrar of Companies
ITR – 5 Income Tax Return 31st July (or 30th September, if tax audit is mandatory) Income Tax Department
ITR – 5 Income Tax Return 31st July (or 30th September, if tax audit is mandatory) Income Tax Department
Audit Tax Audit (only if applicable) 30th September Income Tax Department

The benefits of LLP annual Filing are listed as follows:

  • Higher Credibility: Annual compliance enhances the organization’s credibility, aiding in loan approvals and meeting various requirements.
  • Record of Financial Worth: These filings create a financial track record for LLPs, attracting potential investors and partners.
  • Stays Active and Penalty-Free: Consistent compliance keeps LLPs from being declared defunct, preventing penalties and additional fees.
  • Conversion and Closure: Regular filings simplify the process of converting LLPs into other business structures and expedite partnership dissolution.

IndiaFilings simplifies the LLP annual filing process by providing expert guidance and handling essential tasks. Our experts assist in preparing accurate documents, obtaining necessary digital signatures, and ensuring certification by qualified professionals. We emphasize timely filings to avoid penalties and maintain full compliance with regulations. Our streamlined approach allows you to focus on your business while we handle the paperwork, reducing the risk of non-compliance penalties. In a nutshell, IndiaFilings makes the LLP annual filing straightforward and ensures your adherence to legal requirements with ease.

Get started now to streamline your LLP annual filings.

LLP Compliance FAQ’s

What are LLP Annual Filings?

LLP Annual Filings refer to the mandatory submissions and reports that Limited Liability Partnerships must file annually with regulatory authorities to maintain compliance.

Why are LLP Annual Filings important?

These filings are crucial for upholding the legal status of an LLP, ensuring transparency, financial accountability, and credibility.

What is the penalty for non-compliance by LLPs?

Non-compliance can result in penalties of up to INR 5 lakhs for LLPs, making it essential to meet annual filing obligations.

What are the key compliance requirements for LLPs?

Key compliance requirements include maintaining proper books of accounts, filing annual returns (Form 11), filing statements of accounts (Form 8), and filing Income Tax Return (ITR – 5).

What is the due date for filing Form 11 (Annual Return) by LLPs?

Form 11 should be filed within 60 days after the financial year-end, typically by May 30th each year.

What happens if an LLP misses the deadline for Form 11 filing?

Late filing of Form 11 can result in penalties of INR 100 per day of delay.

When should Form 8 (Statement of Accounts) be filed by LLPs?

Form 8 should be filed within 30 days from the conclusion of six months after the financial year ends.

Who can digitally sign Form 8 for LLPs?

Form 8 can be digitally signed by two designated partners of the LLP and must be certified by a company secretary, chartered accountant, or cost accountant.

What is the penalty for late filing of Form 8 by LLPs?

Late filing of Form 8 can result in penalties of INR 100 per day of delay.

Is a tax audit mandatory for all LLPs?

A tax audit is mandatory for LLPs with an annual turnover exceeding Rs. 40 lakhs or contributions surpassing Rs. 25 lakhs, subject to certain conditions.

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