It’s hard to run any company. It takes money, time, and resolves. Furthermore, there are several documents that are onerous, like registration, GST filings, and others. Our PlanMyCompany team of professionals, however, will assist you in all legal needs, for example, the completion of all required forms, the proposal of a proper lawyer, or checking your papers. PlanMyCompany helps you avoid sanctions since you do not submit the relevant form on time. Let’s look at India’s LLP compliance.
What is LLP?
A different juridical entity registered in India under the Department of Corporate Affairs (MCA) is a Limited Liability Partnership. Two partners should be involved in registering an LLP, with at least one being an Indian citizen. The partners shall be responsible for keeping a good account book, filing income tax declarations, and submitting an annual report every financial year with the Ministry of Corporate Affairs (MCA).
Benefits of Limited liability:
- In LLP, one partner is not responsible or accountable for misbehavior or carelessness by another partner
- The partners have the right to directly control the company
- An LLP protects the owners of limited liability
With less than 2 Partners, the single partner will still be able to recruit a new partner to fill the role - An LLP may have unlimited partners after incorporation
- If just one partner exists in an LLP, time is needed to recruit another without the LLP being dissolved.
- It is a distinct legal entity
- LLPs are distinct from promoters’ assets and liabilities
- LLP money may be collected by partners, banks, and NBFCs.
All MCA LLPs are required and each financial year they require an account and yearly return. Whether the LLP did or did not make a profit is nevertheless compulsory for filing the return. Three compliance requirements exist if you have an LLP.
- Annual return submission
- Accounting books
- Reporting of tax returns
A person should submit each financial year two types of annual MCA returns in an LLP. Forms 8 and 11 are the two.
Form 8
Form 8 includes account and solvency statements. Within 30 days of the end of six months of the financial year, you shall file Form 8 together with the fee, i.e. 30 October.
The form must be digitally signed by two selected partners. In addition, a chartered accountant, auditor, or the company’s accounting officer must be certified. Form 8 comprises the LLP assets and liability statement information as well as the LLP revenue and expenditure statement.
In Form 8, two kinds are available. It’s the following:
- Solvency Statement
- Accounting and income and expenditure declaration
If you have not presented this paperwork, you will be required to pay the penalty of rs 100 per day.
Form 11
Form 11 includes yearly returns. All partners and their contributions to the firm should be provided with full specifics on the formula. Within 60 days of the financial year, you must file Form 8 together with the cost. The LLPs terminate every year on 31 March. Consequently, each year on or before 30 May, LLPs should file LLP Form 11.
Keep in mind that if you are not filing yearly LLP returns on or prior to the due date, you may be fined.
Income Tax Filing
For any LLP with a turnover greater than 0,40 lakhs or whose capital is greater than 0,25 Lakhs, you must provide chartered accountant audited income taxes. The deadline for submitting an LLP tax return for checking and reviewing the books is 30 September.
Limited liability corporations (LLPs) required to submit Form 3CEBs can make their tax filings by 30 November. By 30 November they have received their tax filings. In Form ITR 5, LLPs are expected to file their income tax returns. With the aid of the digital signature of the selected partners the form may be filed electronically via the income tax website. In the physical form, LLP tax payments may be paid using banks or e-payment methods.
Books of Accounts
All account books must be maintained on a cash or accrual basis by all LLPs. The report must be correctly filed each year, before 31 March, if necessary. The books of accounts must be submitted to the office if necessary. For LLPs that have more than 40 lakhs of sales or capital above 25 lakhs, a chartered accountant should audit the books.
Every LLP that does not comply with the provisions of the law can be fined a minimum of Rs 25,000 and a maximum of Rs 5,000. In addition, a penalty of 10.000 and — a total of 1 lakh for non-acquiescence might also be imposed on the selected partner.
Summary:
The deadline is 30 September for submission of an LLP Tax Report for review and inspection of books. A minimum of Rs 25,000 and a maximum of Rs 5,000 can be penalized each day in any LLP which does not comply with the terms of the legislation. PlanMyCompany lets you avoid penalties because the necessary form is not provided in time. For example, our team of specialists helps you in all legal issues, to complete all forms needed, to propose a suitable lawyer, or to verify your documentation.
