ANNUAL COMPLIANCES FOR LLP

The income tax rate applicable for Limited Liability Partnerships is 30% of its total income. Besides the income tax, a surcharge is also levied on the income of the tax payable at the rate of 12% if the total income is exceeding Rs.1 crore.

4% Health and Education cess is applicable on the amount of income tax and the applicable surcharge.

Similar to income tax applicable for a company, LLP is also liable to pay the minimum alternate tax. A minimum alternate tax of 18.5% of adjusted total income is applicable for LLP. Therefore, income tax payable by LLP cannot be less than 18.5 percent (increased by other taxes as income tax surcharge, education cess, and secondary and higher education cess).

LLPs that entered into an international transaction with associated enterprises certain Specified Domestic Transactions are required to file Form 3CEB. Form 3CEB should be duly certified by a Chartered Accountant. LLPs required to file Form 3CEB have to file it before its due day that is 30th of the November.

LLPs should file an income tax return in Form ITR 5. Form ITR 5 can be filed online through the official website of income tax using the digital signature certificate (DSC) of the designated partner. After filing an LLP tax return, the taxpayer should take print two copies of Form ITR-V.

One copy of ITR-V, signed by the assessee should be sent by post to Post Bag No. 1, Electronic City Office, Bengaluru–560100 (Karnataka). The other copy can be kept by the assessee for his record.

LLP tax payment can be made in physical mode from designated banks or through online payment mode. LLPs that are required to get their accounts audited are needed to pay tax through online payment mode only. To pay tax at designated banks, Challan ITNS 280 must be submitted with the tax payment.

All the Limited Liability Partnership is required to maintain proper books of accounts on a cash basis or accrual basis. Private Limited Companies are required to maintain books of accounts only on an accrual basis. But LLPs have the option of maintaining their books of accounts on a cash basis as well. The books of accounts should be maintained at the registered office of the LLP and must contain all the relevant information such as:

• Cash inflow and outflow of business

• Assets and liabilities

• Statement of Cost of Goods Sold

• Inventories and finished goods statement

• At the end of each financial year, the LLPs are required to prepare their financial statements within 6 months for filing with the registrar of companies.

All registered LLPs are essential to maintain their books of accounts and fill the data regarding the profits earned as well as other financial data relevant to business and submit it in attachments of Form 8 annually to registrar of companies.

Form 8 must be digitally signed by the designated partners. It is also mandatory to get it certified by a practicing chartered accountant or a practicing company secretary or a practicing cost accountant.

Failing to file the statement of accounts and the solvency report within the specified time period will lead to a penalty of Rs. 100 per day.

The LLPs are required to authorize the partners for maintaining proper books of accounts and filing the annual return with the Ministry of Corporate Affairs annually.

The books of accounts of the LLPs need not to be audited if the annual turnover is less than Rs.40 lakh or if the contribution is less than Rs. 25 lakh. Therefore, the process of annual filing is easier for the LLPs. Some of the annual filings are mandatory even if the LLP has just started the business or not.

The due date for tax filing has been extended to 10th of January, 2021 from December 31st, 2020 and if tax audit is needed for the LLP then the due date for Income tax returns for LLP has been extended till 15th February, 2021 from 31st January, 2021.

Even if the LLP has not done any business in the current financial year, the LLP is required to file a Nil Income Tax returns with the tax authorities.

LLP Form 8 is an annual filing of Statement of Account & Solvency, is to be filed with registrar of companies annually. Statement of account and solvency should be filed with the registrar within 30 days from the end of 6 months of the financial year to which the statement associate. The due date for LLP annual filing is 30th of the October.

This form contain a declaration on the solvency state of the LLP by the designated partners and also details related to the statement of assets and the liabilities and statement of income and the expenditure of the LLPs.

LLPs are needed to get the accounts audited by a practicing chartered accountant if the annual turnover in any financial year exceeds Rs. 40 lakhs or if the contribution exceeds Rs. 25 lakh.

To avail exemption from audits, the LLP accounts should include a statement by the partners to the effect that the partners recognize their responsibilities for complying with the requirements regarding accounting and preparation of financial statements.