LLP – Advantages, Incorporation Procedure, Compliance, Tax Liability
A Limited Liability Partnership (LLP) is governed under LLP Act 2008, LLP is a partnership in which liability of all or some members is limited. hence, no member shall liable for the acts of other partner except in case of fraud. LLP shall be body corporate and a legal entity separate from its partner.
Advantages of LLP:
- Liability of member is limited except in case of fraud.
- It is a separate legal entity, having perpetual succession.
- Death of partner does not affect its continuance.
- LLP is eligilble to enter into compromise, amalgamation, meger, reconstruction etc.
- Partner can contract with LLP, or it may give loan to LLP.
- Lesser statutory compliance as compare to company.
- LLP can voluntary wound up or by the order of court.
Following Statutory Requirements to Form LLP:
- There must be minimum two partners; out of one should be a resident of India.
- Partners must have valid DPIN (designated partner identification number).
- Partners have DSC.
- Certified true copy of LLP agreement.
- Proof of residence address of partners- adhaar card.
- Proof of identity of partners- pan card.
- Passport size photograph of applicants.
- Bank statement/ electricity bill of partners.
- NOC for registered office.
Procedure for Incorporation:
- Application for DSC/DPIN application for DIN/DPIN shall be made in form DIR-3.
- Acquire and register DSC
- New user registration
- Incorporate a LLP apply for name reservation in form-1. form-2 is filled for filling incorporation documents.
- File LLP agreement LLP agreement shall be file within 30days of incorporation in form-3.
Compliances of LLP:
- Filling of LLP Annual Return:
Annual return shall contain detailed summary of change in management. every LLP shall required to file annual return in form 11 to the registrar within 60 days of closer of financial year i.e it has to be filled before 30th may every year.
- Filling of Statement of Account & Solvency:
Statement of account & solvency shall required to filled in form-8 on or before 30th october every year.
It should be noted that LLP whose turnover exceeds rupees 40lakh or partners contribution exceeds Rs. 25 lakh are required to get their accounts audited by auditor
- Filling of Income Tax Return:
LLP shall file its income tax return in ITR-5. this return shall be filled electronically. due date – in case of LLP account audit 30th September of every year
- in case of audit is not required 31st july of every year
- in case LLP is involved in international business 30th November of every year
Tax Liabilities on LLP:
- income tax for LLP is 30% flat
- surcharge: 12% on income, where income exceeds Rs. 1crore
- heath & education cess-4%
- Adjusted minimum tax-18.5 of adjusted total income