Limited liability partnership Compliance

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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.