Mandatory Compliances for a Limited Liability Partnership in India
A Limited Liability Partnership (LLP) in India needs to follow specific compliance procedures under the law to avoid paying fines or undergo other consequences. LLP is also a business structure that combines the advantages of a partnership, along with the limited liability of a company. In such an entity, either some or all the partners have limited liability.
Who Should Form a Limited Liability Partnership in India?
This business format is suitable for small and medium-sized firms, especially service sector companies. It is ideal for firms, which carry activities that involve professionals.
Key Benefits Available to a Limited Liability Partnership in India
- Members have lesser liabilities to debts that may arise while running the company. The members’ personal assets have protection from business liabilities.
- A partner is not responsible for another partner’s mistake or carelessness.
- The members of an LLP get the flexibility peculiar to a partnership company in managing the business.
- An LLP is a legal entity that can identify from its members. It can enter into contracts, own, buy, rent, or lease property, or employ staff. Legal action can also be taken against it if needed.
Procedure for Registration of a Limited Liability Partnership in India
- You need to register on the website of MCA (Ministry of Corporate Affairs), mainly made for LLP services. You can click on the ‘Register’ tab on the page.
- Fill the registration form. Those fields marked with a ‘*’ must be filled compulsorily. It would be best to have a user name and a password.
- Next, upload the digital signature certificate.
- The system also gives you a message after a successful registration.
Limited Liability Partnership in India Must Follow Regulatory Compliances
- File the Annual return with the MCA: Form-11 is prescribed for the annual return filing of LLPs which includes the details of the partners of the LLP. It must also contain details about changes in the firm’s partners for the benefit of the MCA. The form must be filed on the 30th of May within 60 days of 31st March, which is the financial year-end.
- Filing the Statement of Account and insolvency: An LLP has to maintain proper statements and all essential books of accounts. Form 8, with all the account details required, has to be filed with the Registrar of companies. Also, for those LLPs whose turnover exceeds Rs. Fifty lakhs or contribution exceeds Rs. 25 lakhs, it is mandatory to get a statutory audit. The last date of filing the form with MCA is 30th October.
The LLP has to file the above forms with the MCA even if it has not commenced business and not carried out a single transaction.
- Filing the Income Tax Returns: The income tax returns have to submit by LLPs after the end of every financial year.
Prescribed dates for filing the returns:
- 31st July, for those LLPs whose audit is not a requirement.
- 30th September, for LLPs who require an audit as per the law.
- DIN holders should file DIR-3 KYC if they do not hold the position of a director or designated partner in an LLP or company.
- File E form DIR-3 KYC for the first time.
- File DIR-3 KYC WEB for further filing.
Usually, 30th September of the next immediate financial year is the last date for filing the DIN form.
The LLP Act 2008 stipulates that all the steps mentioned above are mandatory for LLPs. Then, non-compliance would result in heavy penalties for the Limited Liability partnership daily. 3E Accounting is backed by years of valuable experience and provides essential assistance for business compliance to LLPs and helps them avoid penalties and other legal actions. If you are looking to set up a limited liability partnership in India, then feel free to get in touch with our team and we will be more than happy to support you.