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Pankaj Tyagi
| Updated: 29 Jul, 2020 | Category: Limited Liability Partnership Firm

A Complete Guide on Annual Filings for Limited Liability Partnership

Annual filings for Limited Liability Partnership

The Limited Liability Partnership (LLP) must ensure the periodic filing of the tax return to avert penalties and ensure compliance with the law. Unlike a private limited company, Limited Liability Partnership (LLP) is less vulnerable to stringent compliances. However, it doesn’t give the implication that LLP has no obligation to address. In case of violation, LLP has to confront penalties that are significantly higher than that of a private limited company. In this blog, you will come across several aspects of Annual filings for Limited Liability Partnership.

LLP Registration

For instance – whenever a private limited company caught in a felony of breaching tax provision, the penalty of Rs 1 lakh imposed on them. On the other hand, in the LLP, this penalty escalates up to 5 lakh. Therefore, LLP needs to remain on alert despite having less compliances to follow.

  • A registered LLP is deemed as a separate legal entity; therefore, the existing partners must ensure proper maintenance of account books. Such individuals are also accountable for filing an annual return with the MCA[1] annually.
  • Limited Liability Partnerships can avert the provision of periodic auditing for their account book if their turnover is well below the threshold limit, i.e., Rs 40 lakh. This would eventually help them to confront fewer hassles while filing the annual return.
  • LLPs are liable to file their Statement of Account & Solvency in a predetermined timeframe i.e., within 30 days from the closure of 6 months of the fiscal year. Furthermore, LLP must file their annual return in the timespan of 60 days from the end of the fiscal year.

Unlike other business models, LLPs are liable to maintain the fiscal year i.e., from April 1st to March 31st. Therefore, LLP is required to file the Statement of Account & Solvency on or before October 30th and annual return on May 30th every fiscal year. LLPs cannot avert the filling of annual returns even if they are struggling to commence their business. Breaching such conditions could lead to hefty penalties. Let’s go ahead and explore more about Annual filings for Limited Liability Partnership.

Statements of Accounts and Solvency

LLPs operating under required compliance need to maintain their account book without exception and fill in data according to the profit made. They are also responsible for sparing the financial data accordingly and use Form 8 for their submission. Keep in mind that Form 8 seeks approval of designated partners and practicing chartered accountant through a valid signature. If the LLP fails to comply with said provisions, the penalty of INR 100/day will be imposed on them.

Form 8 is associated with the Statement of Account and Solvency. It must represent the transactions undertaken during the financial year. Apart from this, the LLP should make the declaration regarding the following:-

  • The turnover, whether it is below or above the threshold limit.
  • Previously filed statement rendering the info related to satisfaction/ modification until the current fiscal year.
  • Numbers of partners/authorized representatives accountable for the preparation of accounts.

Read our article:Know how Limited Liability Companies are taxed in India!

Annual Filings for Limited Liability Partnership

Form 11 is a legal document that is used for the filling of annual returns. This form encompasses the details related to management affairs such as the number of the designated partners and their names. The LLPs have to file form 11 on or before May 30th every fiscal year.

Filing and Audit prerequisites for LLP

As we already mentioned, LLPs earning or contributing more than the threshold limit is liable to conduct a periodic audit of their account book under the supervision of practicing Chartered Accountants. Such LLPs must file their tax return on or before September 30th every fiscal year.

Note: Every person engaged with business and maintaining an account book needs to cater to auditing requirements if the turnover or total sale from the previous year surpasses the threshold limit i:e 1 crore.

To provide relaxation in this context, Section 44B might undergo some changes to increase the threshold limit to Rs 5. However, such a threshold limit is only applicable when the taxpayer’s cash receipt is limited to 5% of the aggregate payment. For LLPs where the deadline is not applicable to a tax audit, the tax filing should be done on or before July 31st.

For LLPs undertaken domestic and international transactions, they need to utilize Form 3CEB to file the taxes. LLPs who are required to avail such form needs to certify it by a practicing Chartered Accountant. The due date of filing such a form is November 30th. All the LLPs must file their income tax via form ITR 5. The form is available at the income tax website. The LLC’s partner should have a digital signature at their disposal while completing the filling requirement online.

Important Points to Remember

  • Form 8 must be filed on or before October 30th. Failure to file attracts the fine of Rs.100 per day of delay.
  • If the LLP’s turnover surpasses Rs 40 lakh or a partner’s contribution exceeds Rs. 25 lakh, then the auditor shall approve Form 8 of the LLP
  • If the LLP fails to file Form 11 in a predetermined time frame suggested by law, then a fine of Rs 100/day will be imposed for the delay.
  • Form 11 depicts the detail regarding the partner and all the contributions made.
  •  If the turnover stays at 5 crores and the contribution threshold does not surpass Rs 50 lakh, then the designated partner’s digital signatures will suffice. On the contrary, if the turnover value and contribution rushed through the threshold limit, LLPs partner needs to certify the form 11 by a Company Secretary.

Conclusion

LLP is one of those business models which discourages the stringent compliance and have nominal tax obligations. This is the reason why upcoming entrepreneurs prefer such a business model. There are some tax obligations that LLP needs to address precisely to avoid penalties. Hence, we can conclude that LLP is a conducive business model that lures low compliance and operates more seamlessly than other business models. If you are confronting some legal obstacle regarding Annual filings for Limited Liability Partnership, let the CorpBiz‘s expert help you out.

Read our article:Appointment procedure of Designated Partner in LLP

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Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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