Introduction
Limited Liability Partnerships (LLPs) are a popular form of business structure in India, offering the benefits of limited liability to its partners along with the flexibility of partnership. LLPs are governed by the Limited Liability Partnership Act, 2008, and are required to comply with various regulatory requirements to ensure legal and financial transparency, accountability, and good corporate governance.
Key Compliance Requirements
Annual Compliance
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Annual Return: LLPs are required to file an annual return (Form 11) with the Registrar of Companies (RoC) within 60 days from the closure of the financial year.
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Financial Statements: LLPs must prepare and file financial statements (Form 8) containing a statement of accounts and solvency with the RoC within 30 days from the end of six months of the financial year.
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Audit Requirement: LLPs with a turnover exceeding INR 40 lakhs or a contribution exceeding INR 25 lakhs are required to get their accounts audited by a qualified Chartered Accountant.
Income Tax Compliance
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Income Tax Return: LLPs must file their income tax return (ITR-5) with the Income Tax Department by the due date, usually 31st July of the assessment year.
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Tax Deducted at Source (TDS): LLPs are required to deduct TDS on certain payments made and deposit it with the government within the specified timelines
GST Compliance
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GST Registration: LLPs engaged in taxable supply of goods or services with an aggregate turnover exceeding the prescribed threshold are required to register under the Goods and Services Tax (GST) regime.
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GST Returns: LLPs must file GST returns, including GSTR-3B for monthly summary returns and GSTR-1 for monthly/quarterly details of outward supplies.
Compliance with LLP Agreement
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LLP Agreement: LLPs must comply with the terms and provisions of the LLP Agreement executed between the partners, including contributions, profit-sharing ratios, rights, duties, and responsibilities.
Compliance with Other Laws
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Labour Laws: LLPs must comply with various labor laws such as the Employees' Provident Fund Act, Employees' State Insurance Act, Payment of Gratuity Act, etc., depending on the size and nature of their workforce.
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Other Regulatory Requirements: LLPs may be subject to compliance with sector-specific laws, licensing requirements, environmental regulations, data protection laws, etc., depending on their business activities.
Penalties for Non-Compliance
Failure to comply with LLP compliance requirements can attract penalties and consequences, including:
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Late filing fees and penalties imposed by regulatory authorities.
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Disqualification of partners or LLP itself from holding office or exercising certain rights.
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Prosecution of partners or designated partners for non-compliance with statutory obligations.
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Revocation of LLP registration by the RoC in extreme cases of non-compliance.
​Conclusion
LLP compliance in India is essential for ensuring legal, financial, and regulatory adherence, maintaining the credibility and reputation of the LLP, and mitigating risks associated with non-compliance. It is imperative for LLPs to establish robust internal controls, maintain accurate records, and stay abreast of regulatory changes to fulfill their obligations effectively and sustainably operate in the business environment. Seeking professional advice and assistance from qualified professionals such as Chartered Accountants, Company Secretaries, and Legal Advisors can help LLPs navigate the complexities of compliance and ensure smooth business operations.