ROC and Income Tax Annual compliance of Limited Liability Partnership
Introduction:-
Limited Liability Partnership (LLP) was introduced in India by way of the Limited Liability Partnership Act, 2008. The basic premise behind the introduction of Limited Liability Partnership (LLP) is to provide a form of business entity that is simple to maintain while providing limited liability to the owners. LLP has many advantages like :- (Separate Legal Entity:) LLP is a separate legal entity from the partners. Each partner can sue the other in case a situation arises. It has an uninterrupted existence that follows perpetual succession, i.e., the partners might leave, but the business remains. A term of dissolution has to be mutually agreed on for the firm to dissolve. (Flexible Agreement:) Transferring the ownership of LLP is also simple.
A person can quickly be inducted in as a designated partner and the ownership switches to them. (Suitable For Small Business:) LLPs having a capital amount less than 25 lakhs and turnover below 40 lakhs per year do not require any formal audits. It makes registering as LLP beneficial for small businesses and startups. An LLP can own or acquire property because it is recognized as a juristic person. Partners of LLP cannot claim the property as theirs. (No Owner Distinction:) An LLP has partners, who own and manage the business. This is different from a private limited company, whose directors may be different from shareholders. For this reason, VCs do not invest in the LLP structure.
Note:
If any LLP is incorporated after 30th Day of September of the financial year may end its financial year on the 31st March of the year next following year. For eg. Suppose a LLP is incorporated on 15th day of Nov. 2019 then such LLP can file the Form 8 and 11 after 31st Day of March, 2021. However, ITR of LLP has to be filed for the FY ended March, 2020.
ROC Annual Filing of LLP
Every LLP registered under the act have to compulsorily file annual accounts and annual return forms (Form-11 and Form-8) with ROC every year before the due date.
Form -11 :- Every LLP registered under the act is required to file annual return in Form-11 pursuant to Section 35(1) of the LLP Act, 2008 within 60 days of end the respective financial year i.e. 30th May.
Following detail has to be fill in the Form -11
- Details of the partners,
- Their contribution
- Details of body corporate in which they hold directorship.
The form has to be digitally signed by two designated partners and shall be certified by the practicing professional, if required.
In case of non-filing of the form before due date, additional fees of Rs. 100 per day is levied till the date of filing.
Note :- Due date to file LLP Form-11 for FY 19-20 : 30th May, 2020. Further due to COVID-19, the government has extended the date till 30th September, 2020.
Form -8 :- Every LLP registered under the act is required to prepare books of accounts file financials in Form-8 pursuant to Section 34(2) of the LLP Act, 2008 within 30 days of end six months of the closure of the financial year i.e. 30th October.
Following detail has to be fill in the Form -8
- Report the statement of solvency and statement of accounts
- Income and Expenditure for the year and disclosure under MSMED Act, 2006.
- The turnover and contribution of the partner in LLP decides the criteria of audit of LLP. LLP whose turnover is more than 40 lakhs or capital contribution of partners is more than 25 lakhs, are required to gets their books audited by practicing Chartered Accountant.
The form has to be digitally signed by two designated partners and shall be certified by the practicing professional.
In case of non-filing of the form before due date, additional fees of Rs. 100 per day is levied till the date of filing.
Due date to file LLP Form-8 for FY 19-20 : 30th October, 2020.
Income Tax Annual Compliances
Every LLP registered under the act has to comply with the Income tax Returns as well and file the same within due time. LLP are required to file Income Tax Return in ITR-5 within the time frame as applicable.
The tax audit applicability for FY 19-20 is Rs. 2 cr. and is proposed to be increased by FY 20-21 as per Budget 2020 to Rs. 5 cr. if the taxpayer’s cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments.
Due date to file ITR of LLP for FY 19-20
In case of unaudited books of accounts: 31st July, 2020
In case of audited books of accounts: 30th September, 2020
You were reading ROC and Income Tax Annual compliance of Limited Liability Partnership.
ROC and Income Tax Annual compliance of Limited Liability Partnership
ROC and Income Tax Annual compliance of Limited Liability Partnership
ROC and Income Tax Annual compliance of Limited Liability Partnership
ROC and Income Tax Annual compliance of Limited Liability Partnership
ROC and Income Tax Annual compliance of Limited Liability Partnership