LLP Compliance
Legal Darbar offers the LLP Compliance service, which is a unique business structure that combines the flexibility of a partnership with the advantages of limited liability. While LLPs have fewer compliance requirements than private limited corporations, they must still comply with legislative and regulatory duties under the Limited Liability Partnership Act of 2008 and Ministry of Corporate Affairs (MCA) rules in India.
Maintaining compliance is critical for a limited liability partnership (LLP) to avoid penalties and guarantee smooth operations. LLP compliance is more than just a legal obligation; it is also necessary for the business’s seamless operation, financial stability, and legitimacy. Regular compliance ensures that LLPs follow the law, build investor trust, and avoid unwarranted financial constraints. legaldarbar.com
Key elements of LLP Compliance legal darbar is consisting of:
1. Annual Compliance: LLPs must meet annual compliance standards, regardless of turnover or commercial activity.
- Annual Return: (form LLP-11).
- Due date: May 30 (within 60 days of the fiscal year end).
- Purpose: Declaration of partners, amendments to the LLP, and basic LLP information.
- Statement of Accounts and Solvency (form LLP-8)
- Due Date: October 30 (within 30 days of the conclusion of the six-month financial year).
- Purpose: Statement of financial condition, including assets, liabilities, and solvency status.
- Must be signed by selected partners and certified by a Chartered Accountant.
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2. Income Tax Compliance: LLPs must file annual Income Tax Returns (ITR-5).
- Due date: July 31 (for LLPs not requiring an audit).
October 31 (for LLPs requiring an audit). - Tax Audit Requirements: If the turnover exceeds ₹1 crore, the LLP accounts must be audited under the Income Tax Act of 1961.
- Additionally, GST compliance is required if applicable.
- LLPs that provide goods or services must comply with GST requirements if their turnover exceeds
₹40 lakh (goods) / ₹20 lakh (services) (₹10 lakh for special states). - GST returns must be filed monthly or quarterly, depending on the GST scheme used (regular or composition).
3. ROC Event-Based Compliance: Certain changes within an LLP require statutory reporting to the Registrar of Companies.
- Change in Partners (Forms LLP-3 and LLP-4)
- Forms LLP-15 and LLP-3 allow for changes to the registered office and LLP agreement.
LLP Closure Form (LLP-24) - Each form has a set filing deadline, which is normally within 30 days of the amendment, to avoid penalties.
5. Other Regulatory Compliance: TDS (Taxes Deducted At Source) Compliance (If relevant, payments made to vendors or workers).
- Labor Law Compliance (If the LLP has employees, it must follow PF, ESI, and labor rules).
- FEMA Compliance (if there are any foreign investments or transactions).
6. Penalty for Non-compliance: Failure to comply with LLP regulations results in significant penalties:
- Late filing of Forms LLP-8 or LLP-11 costs ₹100 each day until filing.
- Failure to file income tax returns results in interest and penalties under income tax rules.
- Serious non-compliance: The LLP may be labeled a ‘defaulting LLP’ and closed.
Consequences of Noncompliance:
- Late submission of LLP-8 or LLP-11 incurs a ₹100 penalty each day till filed.
- Income Tax Noncompliance: Penalties range from ₹1,000 to ₹10,000, including interest for delinquent taxes.
- Failure to keep books of accounts: The ROC may declare the LLP “Defunct” or “Struck Off”. legaldarbar.com
The legal darbar will tell you about the importance of LLP compliance: –
• Legal Protection & Avoiding Penalties:
Non-compliance leads to penalties, fines, and possibly LLP dissolution. Filing yearly returns, financial statements, and tax returns on schedule helps LLPs remain in good standing with regulatory agencies. Non-filing of LLP compliance paperwork might result in a penalty of ₹100 per day per form with no maximum limit.
• Maintaining LLP’s Legal Status: Failure to meet compliance criteria can lead to the LLP being listed as “defunct” or “inactive” by the Ministry of Corporate Affairs (MCA).
• Financial and Tax Benefits: Proper tax filings allow LLPs to collect deductions and exemptions while avoiding legal difficulties.
Ensures that loan, investment, and funding approvals are processed efficiently.
• Improving Business Credibility and Investor Trust: A compliant LLP fosters trust among investors, banks, and clients.
The timely submission of financial documents enhances openness and corporate governance.
Required for raising financing from financial institutions or enticing prospective investors.
• Avoiding Personal Liability of Partners: Compliance provides limited liability protection, which means partners are not individually accountable for LLP debts.
• Smooth Business Operations and Expansion: Allows for hassle-free business expansion, such as adding new partners, shifting office locations, or engaging in contracts, which helps to acquire government permits, tenders, and business licenses.
• Regulatory and Statutory Adherence: Compliance with rules such as GST, TDS, and labor laws protects against legal action from tax and regulatory agencies.
Types of LLP compliances:
1. Annual Compliance: LLPs must execute the following mandatory files each year:
- Annual Return (Form LLP-11)—Filed with the Registrar of Companies (ROC) within 60 days of the fiscal year’s end (due May 30).
- Statement of Accounts and Solvency (Form LLP-8)—Filed within 30 days of the conclusion of the first six months of the fiscal year (October 30).
- Income Tax Return (ITR-5) on July 31 for LLPs that do not require audits and October 31 for audited LLPs.
2. Event-based compliance: These appear when particular changes occur within the LLP.
- Change in Partners (Admission/Resignation/Change in Rights and Forms LLP-3 and LLP-4).
- Change of Registered Office – Form LLP-15
- Change of Name of LLP – Form LLP-5
- To change the LLP agreement, use Form LLP-3. To appoint or resign as a designated partner, use Form DIR-12.
LLP Closure – Form LLP-24 - These forms must be submitted within 30 days of the corresponding incident.
3. Tax Compliance: Income Tax Filing (ITR-5) is mandatory for all LLPs.
- If turnover surpasses ₹1 crore, a tax audit is mandatory under the Income Tax Act.
- GST compliance requires LLPs to file monthly or quarterly filings (GSTR-1, GSTR-3B, GSTR-9) if their revenue exceeds the GST threshold (₹40 lakh for goods, ₹20 lakh for services).
- TDS Compliance – LLPs are required to deduct Tax Deducted at Source (TDS) on specified payments and submit TDS returns (Form 26Q, 24Q, etc.) periodically.
4. Secretarial and Regulatory Compliance: Maintaining Books of Accounts of LLPs must keep accurate records of financial transactions.
- FEMA Compliance – If foreign investments or transactions take place, compliance with the Foreign Exchange Management Act (FEMA) is necessary.
- Labor Law Compliance – If the LLP has employees, it must follow the Provident Fund (PF), Employee State Insurance (ESI), Professional Tax, and Labor Welfare Acts.
5. Compliance with Specific LLPs: Some LLPs have additional compliance obligations based on their business operations.
- FSSAI Compliance is required for food-related businesses.
- RBI Compliance applies to LLPs that conduct financial transactions or operate as Non-Banking Financial Companies (NBFCs).
- Industry-Specific Compliance – For sectors such as healthcare, education, and real estate, additional regulatory approvals and filings may be required. legaldarbar.com
Legal Darbar provides the best advantages for LLP compliance:
1. Limited Liability & Legal Protection.
2. Goodwill & Business Credibility.
3. Steer clear of fines and legal repercussions.
4. Fundraising and Business Growth Ease.
5. Constant Presence & Easy Functions.
6. Advantages of Taxes and Compliance.
7. Adherence to Regulations for Business Growth.
FAQs for LLP Compliance?
Annual returns, financial statements, income tax returns, GST filings, partners KYC updates, legal audits, and compliance with MCA and RBI laws all are part of LLP compliance.
Yes, LLP partners have to finish their KYC. Every year, they have to submit a Form DIR-3 KYC to confirm their identification.
Forms 8 (Statement of Accounts) and 11 (Annual Return) are filed annually by LLPs in order to verify compliance with MCA laws and to avoid penalties for non-filing.
No, an LLP does not require a Memorandum of Agreement (MOA) or an AOA. Instead, an LLP Agreement defines the organization’s structure, functions, responsibilities, and operating structure in compliance with the LLP Act.
LLPs face penalties for noncompliance, which includes fines, late fees, partner rejection, and possible legal charges, depending on how serious the offense is?
An LLP must file Form 11 by May 30 of every financial year, declaring the details of its partners and their contributions for compliance.
If an LLP misses the Form 11and form 8 filing deadline, it will result in a penalty of ₹100 per day until filed.
LLPs are taxed at 30% on profits over ₹1 lakh. In addition, the income tax is subject to a 12% penalty and 4% taxes.
Yes, balance sheets are required for LLPs. They must provide annual financial accounts to the MCA, including a balance sheet and a revenue of profit & loss statement.
LLPs can deduct expenses like as salary, rent, supplies for the office, legal fees, loan interest, impairment, business travel, and other operational costs.
Legal Darbar manages annual filings, ROC submissions, tax returns, partner agreements, and regulatory updates to ensure legal compliance and efficient business operations.