Limited Liability Partnership- Annual return filing
- For a Limited Liability Partnership (LLP), it is obligatory that the returns should be filed timely as stipulated to ensure compliance and avoid the harsh penalties set by the law for non-compliance.
- A Limited Liability Partnership is subject to only a few annual compliance obligations, which is astonishingly low in comparison to the compliance requirements applicable to private limited companies.
- However, it appears as though the fines are pretty large. While non-compliance may result in a penalty of up to INR 1 lakh for a Private Limited business, it may result in a penalty of up to INR 5 lakh for an LLP.
Compliances obligatory for an LLP
- Because Limited Liability Partnerships are distinct legal entities, it is the chosen partners' responsibility to keep an accurate book of accounts and file an annual return to the Ministry of Corporate Affairs (MCA).
- Limited Liability Partnerships are exempted from auditing their books of accounts until their yearly revenue exceeds Rs.40 lakhs or their contribution exceeds Rs.25 lakh.
- Thus, if an LLP meets the aforementioned requirement, it is not needed to have its books of accounts audited, simplifying the yearly filing procedure.
- It is obligatory for the Limited Liability Partnerships to submit their Statement of Accounts and Solvency within 30 days of the end of the 6 months of the fiscal year and the Annual Return within 60 days of the fiscal year's end.
- In contrast to companies, Limited Liability Partnerships are obligated to follow the fiscal year, which runs between April 1 to March 31.
Statements of Accounts and Solvency
- All registered LLPs are obliged to maintain books of accounts and enter data on profits gained as well as other financial records pertaining to the business duly on Form 8, which must be submitted annually.
- Form 8 must be certified by the signatures of the authorised partners and attested by a certified chartered accountant, a company secretary, or a cost accountant in practice.
- Failing to submit/file the financial statements and solvency report on time may result in a fine of Rs.100 per day. Form 8 must be filed by October 30 of each fiscal year.
Filing Annual Return
- It is obligatory that the Annual Returns must be filed on the specified Form-11. This form serves as an overview of the LLP's management affairs, including the number of partners and their identities. Additionally, form 11 must be filled by the 30th of May each year.
Filing and Audit provision pursuant to Income Tax Act
- As previously noted, Limited Liability Partnerships with a turnover exceeding Rs.40 lakh or a contribution exceeding Rs.25 lakh are pursuant to the Limited Liability Partnership Act 2008 required, to have their books of accounts audited by practising Chartered Accountants.
- As per the norms, September 30th is the deadline for filing a tax return for an LLP that is obliged to have its books audited.
Note: Effective from Assessment Year 2021-22 (Financial Year 2020-21), the Rs.1 crore threshold for a tax audit is raised to Rs.5 crore if the taxpayer's cash revenues are confined to 5% of total income and cash payments are confined to 5% of total payments under the Income Tax Act, 1961.
What additional information must accompany Form 8?
Form 8 must include both the financial/commercial transactions that occurred throughout the fiscal year and the financial situation that endured throughout the year.
Additionally, the LLP must state the following:
- The revenue/turnover, whether it is greater than or less than Rs 40 lakh.
- Additionally, it must declare that it previously submitted a statement detailing the establishment of charges/satisfactions/ modifications till the present fiscal year.
- Additionally, assure that the partners/authorized representatives have exercised due accountability and concern in preparing and maintaining the accounts.
What info must be provided on Form 11?
- Form 11 is a declaration that contains information about the partners and their contributions and efforts. Additionally, the LLP must disclose information regarding other businesses or LLPs in which the partners hold comparable positions.
- Because the contribution reported on Form 11 must correspond to the declaration mentioned on Form 8, it must be filled in carefully.
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