In this article, we have discussed about mandatory Filings of Limited Liability of Partnership. In India, for all purposes of taxation, An LLP is treated like any other partnership firm. In this era of accounting and taxation, LLP has a separate legal entity with a required minimum of 2 partners. However, there is no limit on the maximum no. of partners & no requirement for minimum capital contribution. LLPs are quite common due to the fact that it deals with limited liabilities. The liabilities of the partners in an LLP are limited and separate. In the Limited Liability Partnership, every partner is not liable or responsible for the other partner’s negligence or misconduct.
Mandatory Annual LLP Compliances
- ANNUAL RETURN FILING- Form 11
The fiscal year for the LLPs starts from the 1st of April to the 31st of March.LLP must file annual returns within 60 days of a fiscal year. it is mandatory to file the LLP FORM 11 annual return for all LLP. failure to file Form 11 imposes a penalty of Rs of 100 per day till the date of filing.
- FILING OF STATEMENTS OF THE ACCOUNTS OR FINANCIAL STATEMENTS- Form 8
The LLP manages the preparation of the financial statement that gives a true and correct view of the financial position & performance of LLP. It is Mandatory to file their statement of accounts within 30 days from the end of the 6th month of the financial year. It is mandatory to file form 8 for every LLP with the registrar. failure to file form 8 imposes a penalty of Rs 100 per day till the date of filing.
- Filing of income tax returns- ITR 5
the limited liability partnerships mandatorily to file the income tax return annually. LLP from 11 is an annual return of limited liability partnership and the return must be e-filed each year with the MCA (ministry of corporations and affairs) to maintain compliance & avoid penalty. LLPs must file an income tax return using Form ITR 5. Form ITR 5 can be filed online through the income tax website using the digital signature of the designated partner. There are some benefits of filing Income Tax Returns on time, (1) if you have a refund due from the income tax department, you will have to file an Income tax return to claim the refund. (2) if you are unable to file income tax returns on time, then tax officers have the right to impose a penalty of up to Rs 5000.
- Designated partner KYC – DIR 3
As per MCA’s (Ministry of Corporate Affairs) recent announcement, it notified that it would be conducting KYC (know your computer) verification for all DIN holders whether they are directors of all companies or LLP or not through a new MCA Form DIR-3 KYC.
Process of DIR -3 KYC
- Directors need to provide their KYC documents, Email, and Mobile number.
- Directors need to use their DSC for filing this form.
- Directors need to get the form certified by the Practicing company secretary, Chartered accountant, Cost accountant.
Frequently Asked Questions
Yes, it is mandatory for every Limited Liability Partnership (‘LLP’) to file the return of income irrespective of amount of income or loss.
The due date for filing LLP Form 8 is 30th October of each fiscal year. Failure to file LLP Form 8 can incur a penalty of Rs. 100 per day.
In such a case detail of all the three changes can be filed through the same Form 4 only if the Form is filed on or before 1st May, as all the events fall within 30 days.
LLC stands for Limited Liability Company, it is still a legal body. In comparison, LLP stands for Limited Liability Partnership. It is not a separate legal body for all purposes, and it offers enough guarantee for the partners involved.
Some of the disadvantages of LLPs can be no tax benefits for partners, a minimum number of partners, no equity investment options, public disclosure of all money-related documents and statements, high-income tax rates, a certain penalty in cases of non-compliance.