Compliance for Limited Liability Partnerships (LLP)

Limited Liability Partnerships (LLP) are emerging ever since its introduction through Limited Liability Partnership Act, 2008 as it is a form of business entity, which allows individual partners to be free from the concept of joint liability of partners in a partnership firm. Now, as the government is increasing the compliances and disclosures for a Company form of structure, most of the people are choosing LLP form of business due to its simple and less complex compliances.

But one has to be very vigilant and pro-active about the compliances of LLP as most of its Form involves per day penalty. Accordingly, this article covers the aspects of the filing of the mandatory forms by the LLPs under Income Tax and the Limited Liability Partnership Act, 2008. 

A. Annual Compliances of LLP 

i. Annual Return of LLP – Form 11 

ii. Statement of Account and Solvency – Form 8 

iii. Filing of Income Tax Return by LLP– ITR 5 

B. Basic Event Based Compliances for LLP 

A. Annual Compliances of LLP

Every LLP registered under the provisions of the LLP Act, 2008 is required to file the following forms on the Income Tax Portal/MCA Portal: 

i. Annual Return of LLP – Form 11 Pursuant to Section 35(1) of the LLP Act, 2008 every LLP is required to file Form 11 with the Registrar of Companies within 60 days of the closing of the Financial Year i.e. by 30th May. Number and details partners and designated partners have to be entered into. Attachments: Details of Companies/LLPs in which the Designated Partner/Partners is a Director/partner To be digitally signed by the Designated Partner and certified by a practicing professional. Penalty of Rs. 100/- per day in case of non-filing. Other penal provisions are also there. 

ii. Statement of Account and Solvency – Form 8 Pursuant to Section 34(2) of the LLP Act, 2008 every LLP shall file Form 8 regarding statement of Account and Solvency, within a period of 30 days from the end of six months of the closure of the financial year and accordingly, the same has to be file by 30th October. There is no prescribed format for preparation of financial returns of the LLP and therefore, the accounts are prepared in the format provided in Form 8. Attachments: Audited Financial Statements (in case applicable), Disclosure under MSME Development Act, 2006 and Statement of Contingent Liability, if exists The Form has to be digitally signed by both the Designated partners, Auditor (in case any) and further should be certified by a practicing professional. Penalty of Rs. 100/- per day in case of non-filing. Other penal provisions are also there. 

iii. KYC of Directors – Form DIR – 3 KYC and Web KYC of all Directors. KYC of Directors requires verification of email OTP and mobile OTP both at a time. OTP expires within 10 minutes. If the email or mobile number of a Director is changed, filing of DIR-3 KYC is required. For change in other details of Director such as address form DIR-6 is required to be filed. On or before 30th September every year for all the directors of the Company.

iv. Filing of Income Tax Return by LLP– ITR 5 Every registered LLP shall file Income Tax Return in ITR-5 within the following specified time period: 

1. Every registered LLP with an annual turnover of less than Rs. 40 lakhs in the previous financial year or LLPs where partner’s obligation of contribution is less than Rs. 25 lakh. (not required to get their accounts audited): On or before 31st July. 
2. Every registered LLP having a turnover of more than Rs. 40 lakhs and/or partner’s capital contribution of more than Rs.25 lakhs. (required to get their accounts audited): On or before 30th September.

Special Note: If any LLP is incorporated after 30th Day of September of a year the financial year may end on the 31st March of the year following that year. For eg. Suppose a LLP is incorporated on 3rd of October, 2018 then such LLP can file the Form 8 and 11 after 31st of March, 2020. However, ITR has to be filed for the FY ended March.

B. Basic Event Based Compliances for LLPs. 

1. Appointment/Resignation of Designated Partner/Partner Form 3 and Form 4 (As linked Forms) 

2. Name Change of LLP Form 5 

3. Change of Registered Office Form 15 

4. Changes in LLP agreement Form 3 

5. Strike off name of the LLP Form 24 

6. Change in particulars of Director DIR-6