For a Limited Liability Partnership (LLP), the returns should be filed periodically for maintaining compliance and escape heavy penalty under the law for non-compliance. A Limited Liability Partnership has only few compliances to be followed every year which is amazingly low as compared to the compliance requirements placed on the private limited companies. However, the fines seem to be quite large. Whilst non-compliance might only charge a Private Limited company INR 1 lakh in terms of penalties, it might charge an LLP up to INR 5 lakh.
Limited Liability Partnerships are separate legal entities; hence, it is the duty of the elected partners for maintaining a proper book of accounts and filing an annual return with the Ministry of Corporate Affairs (MCA) annually.
Limited Liability Partnerships are not required to audit their books of account except where their annual turnover is more than Rs.40 lakhs or if the contribution is more than Rs.25 lakh. Hence, an LLP is not required to get their books of account audited if it fulfils the above-mentioned condition, making the process of annual filing simpler.
Limited Liability Partnerships are required to file their Statement of Account & Solvency within a period of thirty (30) days from the end of six (6) months of the financial year and Annual Return within sixty (60) days from the end of the financial year.
Dissimilar to Companies, Limited Liability Partnerships are mandatorily required to maintain the financial year, from 1st April to 31st March. Hence, the Statement of Account & Solvency is to be filled on or before October 30th of every financial year and the annual return for LLPs is due on May 30th every year even if the LLP has not completed any business in that specific financial year. Some of the annual filings are mandatory whether the LLP has begun any business or not.
All enrolled LLPs are required to have their books of accounts in place and fill in data with respect to the profit made, and other financial data in regards to business, and submit it in Form 8, every year. Form 8 must be attested by the signatures of the designated partners and should also be certified by a practising chartered accountant or a practising company secretary or a practising cost accountant. Failing to file, the statement of accounts & solvency report within the specified due date will lead to a fine of Rs.100 per day. The due date to file form 8 is October 30 of every financial year.
Annual Returns are to be filed in the prescribed Form-11. This form is considered as the summary of management affairs of LLP, like numbers of partners along with their names. Moreover, the form 11 has to be filed by 30th May every year.
As discussed earlier, Limited Liability Partnerships whose turnover is more than Rs.40 lakh or whose contribution has exceeded Rs.25 Lakh have to get the books of account audited by practising Chartered Accountants under the Limited Liability Partnership Act, 2008. The deadline to file the tax return for an LLP which is required to get his books audited is September 30th.
Note: The threshold limit of Rs.1 crore for a tax audit is increased to Rs.5 crore with effect from AY 2021-22 (FY 2020-21) 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 under the Income Tax Act, 1961.
For LLPs where tax audit is not required deadline, the due date for tax filing is July 31st. For LLPs which have entered into any international transactions with associated enterprises or have undertaken specified Domestic Transactions, need to file Form 3CEB. This form should be certified by a practicing Chartered Accountant. Limited Liability Partnerships which are required to file this Form can do their tax filing by 30th November.
LLPs should file their income tax return in Form ITR 5. This form could be filed online via the income tax website with the help of the designated partner’s digital signature.
If an LLP is incorporated after the 1st of October of the current year that is say 1 October 2020, then the LLP can file returns in the coming March that is 31 March 2021 or next March that is 31 March 2022 that is an LLP can file its first financial return for a period of 18 months.
Form 8 must be duly filled by the 30th of October. Failure to file can incur a penalty of Rs.100 per day of delay.
A. Form 8 is a Statement of Account and Solvency. It must depict the financial transactions undertaken during the financial year and also the financial position during the year. In addition to this, the LLP must also declare:
The following documents must be attached with Form 8:
Form 8 is a form and hence must be digitally signed by a minimum of two Designated Partners of LLP or Authorised Representatives of Foreign LLP if the total turnover of the LLP is less than or equal to Rs 40 lakh or partner’s obligation of contribution is less than or equal to Rs 25 lakh.
In case the total turnover of the LLP exceeds Rs 40 lakh or partner’s obligation of contribution exceeds Rs. 25 lakh, then Form 8 must be certified by the auditor of the LLP/ FLLP.
If Form 11 is not filed by the LLP by the 31st of May, then Rs 100 will be levied as a penalty per day for delay. The amount can also increase over time as there is no cap on the penalty.
Form 11 is a statement for partner information and all the contributions made. Additionally, the LLP also needs to provide information about other companies or LLPs in which the partners hold a similar position.
The contribution stated in Form 11 must match the declaration made in Form 8, and therefore it must be filled cautiously.
If the turnover does not exceed Rs 5 crores and the total partner contribution does not exceed Rs 50 lakh then digital signatures of the designated partner will suffice. However, if the turnover exceeds Rs.5 crores and the total partner contribution exceeds Rs 50 lakh, then Form 11 needs to be certified by a Company Secretary in full-time practice.