LLP Annual Filing

1. 4/30/24, 12:08 PM Limited Liability Partnership (LLP) Annual Filing Sumeet Mahajan 9 min read Limited Liability Partnership (LLP) Annual Filing LLP Annual Filing is a mandatory task for every Limited Liability Partnership (LLP). It involves filing out and submitting two returns i.e. Form 11 and Form 8 to the Registrar of Companies every year. Filings these returns forms regularly is necessary to comply with the law and avoid hefty penalties. LLPs have fewer yearly compliance requirements compared to private limited companies, but the penalties for non-compliance can be very high. The LLP Annual filings of Returns must be filed electronically with the Ministry of Corporate Affairs, and it's crucial to ensure all information provided is accurate because there's no option for resubmission. Regardless of business activity, revenue or management changes, LLP must submit their Annual Returns and Financial Statements to the Ministry of Corporate Affairs (MCA). https://www.sumeetmahajanandassociates.com/llp-annual-filings 1/10

2. 4/30/24, 12:08 PM Limited Liability Partnership (LLP) Annual Filing Benefits of LLP Annual Filings Compliances Regular Compliances of LLP Annual Filings benefits the LLP in followings ways: • Enhanced Credibility: Annual compliance boosts the organization's credibility, making it easier to secure loans or meet similar requirements. • Financial Track Record: LLPs annual compliance Filings create a financial track record that can attract new investors and interest from other companies. • Active Status and Avoiding Penalties: Keeping up with regular return Filings prevents LLPs from being labeled as inactive and facing penalties. Failure to comply with annual Filings compliance requirements incurs additional fees. • Conversion or Closure: Regular annual return Filings simplify the process of converting LLPs into different types of companies and speed up dissolution procedures for partnerships. LLP Annual Filings Compliances LLPs must comply with certain regulations. They must keep accurate accounts and submit an annual return to the Ministry of Corporate Affairs (MCA). LLPs don't need to audit their accounts unless their turnover exceeds Rs.40 lakhs or their contribution is over Rs.25 lakhs. This simplifies the Filings process. They must submit their Statement of Account & Solvency within 30 days from the end of six months of the financial year, and the Annual Return within 60 days from the end of the financial year. Unlike companies, LLPs must follow the financial year from April 1st to March 31st. Therefore, the Form 8 i.e. Statement of Account & Solvency must be filed by October 30th, and the Form 11 i.e. annual return by May 30th each year, even if the LLP hasn't conducted any business, these annual return Filings are mandatory regardless of business activity has started or not. https://www.sumeetmahajanandassociates.com/llp-annual-filings 2/10

3. 4/30/24, 12:08 PM Limited Liability Partnership (LLP) Annual Filing Types of LLP Annual filing return forms 1. Filings of annual return (Form 11) 2. Statement of Accounts (Form-8) 3. Income Tax Return (ITR) Filings of annual return (Form 11) The LLP annual return, also referred to as Form 11, summarizes information about all designated partners and indicates any changes in the LLP's management. It's mandatory for every LLP to submit Form 11 annually to the Registrar within 60 days after the end of the financial year, meaning by May 31st each year. Filings Form 11 will not be possible if there are any pending payments or processing of e-form 4 (Notice of appointment, cessation, and change in designation of a designated partner or partner) with the MCA. Thus, it's crucial to complete any pending e-form 4 well before the LLP Annual Return's due date. Failure to file LLP return Form 11 Annual Return by the due date of May 31st will result in a penalty of Rs.100 per day until compliance is achieved. Since there's no limit on the penalty, the amount will accumulate over time. Therefore, it's essential to file on time to avoid hefty penalties. Information & Document Required to File LLP Form 11 To file the LLP Annual Return, the following information and documents are necessary: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. (This information must be attached if any Partner/Designated Partner holds such positions elsewhere). LLP Identification Number LLP Name Registered office address of the LLP Business Classification of the LLP (Business,Profession,Service,Occupation,Others) Principal business activities of the LLP Details of Designated Partners and Partners of the LLP Total contribution obligation of partners of the LLP Total contribution received from all partners of the LLP Summary of Designated Partners and Partners Details of any penalties imposed on the LLP, if applicable Information on any compounded offenses, if applicable Details of any other LLP or company where Partner/Designated Partner holds a Director/Partner position https://www.sumeetmahajanandassociates.com/llp-annual-filings 3/10

4. 4/30/24, 12:08 PM Limited Liability Partnership (LLP) Annual Filing Statement of Accounts (Form-8) Filing Every LLP is required to finalize its books of accounts for March 31st ended year and prepare the Balance Sheet and Profit and Loss statement. These finalized books of accounts details needs to be submitted annually in Form 8. Form 8, also known as the statement of account and solvency, is a return Filing form that all LLPs registered in India must submit annually to the Ministry of Corporate Affairs (MCA). Regardless of the LLP's turnover, Form 8 must be filed with the MCA. At least two designated partners must submit Form 8 to the Registrar. Form 8 must be completed and submitted by October 30th. Failure to do so may result in a penalty of Rs.100 per day until the Filing is completed. What additional information needs to be provided along with Form 8? Form 8, known as the Statement of Account and Solvency, outlines the financial activities and position of an LLP during the financial year. Along with this, the LLP must declare: • • satisfaction of charges up to the current financial year. • Assurance that partners or authorized representatives have diligently the accounts. Whether its turnover exceeds or falls below Rs. 40 lakhs. Confirmation of previously filed statements regarding the creation, modification, or prepared and maintained What are the attachments to Form 8? The following documents must be attached with Form 8: • Disclosure under Micro, Small and Medium Enterprises (MSME) Development Act, 2006 is a mandatory attachment. • Statement of contingent liabilities to be attached in case any contingent liability exists. • Any other relevant information can be provided as an optional attachment. Who needs to authorize Form 8? Form 8 is a document that requires digital signatures from at least two Designated Partners of an LLP or Authorized Representatives of a Foreign LLP if the LLP's turnover is equal to or less than Rs 40 lakh, or the partner's contribution is equal to or less than Rs 25 lakh. However, if the LLP's turnover exceeds Rs 40 lakh or the partner's contribution surpasses Rs 25 lakh, then Form 8 must be certified by the LLP's/FLLP's auditor. https://www.sumeetmahajanandassociates.com/llp-annual-filings 4/10

5. 4/30/24, 12:08 PM Limited Liability Partnership (LLP) Annual Filing Procedure to file LLP Form 8 1. Download the Form: Access the Form from the MCA website, ensuring you follow the provided instructions. 2. Find your LLPIN: Enter your LLP name to locate the LLPIN associated with your LLP from the MCA records. 3. Pre-fill Form 8: Utilize the pre-fill feature to input the relevant details such as the reporting year and periodicity (annual or interim). Basic information up to Part A point no. 1 will be auto- populated. The total capital contribution as of the specified date will be automatically displayed based on your Form 11 - Annual Return. 4. Complete Statements: Fill in the Statement of Accounts and the Statement of Income and Expenditure using the pre-filled information. Use "0" where no quantity is applicable. 5. Attach Documents: Upload the necessary files and attachments as instructed. 6. Review and Sign: Double-check the form for any errors before submission. Add your digital signature to authenticate the form, then click Submit. 7. Submit and Pay: Upload the form and proceed with the required transaction fee payment. Keep note of the generated SRN number for future reference. Income Tax Return (ITR) Filing Limited Liability Partnerships (LLPs) have gained popularity as a flexible and advantageous form of business structure in India. LLPs offer a blend of corporate and partnership features, making them an attractive option for many entrepreneurs. However, like any other business entity, LLPs are subject to taxation regulations in India. https://www.sumeetmahajanandassociates.com/llp-annual-filings 5/10

6. 4/30/24, 12:08 PM Limited Liability Partnership (LLP) Annual Filing Understanding the rules and procedures for filing Income Tax Returns (ITR) annually is essential for LLPs to ensure compliance and avoid penalties. 1. Understanding LLP Income Tax • LLPs in India are taxed as separate legal entities, distinct from their partners. LLPs are subject to income tax under the Income Tax Act, 1961, and the rules laid out by the Ministry of Corporate Affairs (MCA) and the Income Tax Department. LLPs are required to file their income tax returns annually, irrespective of whether they have taxable income or not. • • 2. Eligibility for LLP Income Tax Filing • Every LLP registered under the Limited Liability Partnership Act, 2008, is required to file income tax returns. LLPs with annual turnover exceeding Rs. 40 lakhs or whose contribution exceeds Rs. 25 lakhs are mandated to get their accounts audited under the LLPs need to file Form 3CD along with their income tax returns. • Income Tax Act. Such 3. Types of LLP Income Tax Forms • LLPs are required to file income tax returns using Form ITR-5, which is specifically designed for LLPs. The form must be filed electronically on the Income Tax Department's official website within the due date specified by the authorities. • 4. Documents Required for LLP ITR Filing • Financial statements, including Profit and Loss Account and Balance Sheet. Statement of Partners' Capital. Auditor's Report (if applicable). Tax audit report in Form 3CD (if applicable). PAN card and Aadhaar card details of partners. Bank statements and other financial records. • • • • • 5. Steps for LLP ITR Filing • Obtain digital signature certificates (DSCs) for designated partners to sign the LLP's tax return electronically. https://www.sumeetmahajanandassociates.com/llp-annual-filings 6/10

7. 4/30/24, 12:08 PM Limited Liability Partnership (LLP) Annual Filing • • Prepare financial statements and tax computation. Complete Form ITR-5 with accurate details of income, deductions, and tax liability. Attach necessary documents and tax audit reports (if applicable). Verify and digitally sign the ITR using DSCs. Submit the ITR electronically on the Income Tax Department's e-filing portal. Receive acknowledgment and keep it safely for future reference. • • • • 6. Important Deadlines • LLPs must file their income tax returns by the due date specified by the Income Tax Department, usually July 31st of the assessment year. Late filing of returns attracts penalties and interest charges, so it's crucial to adhere to the deadlines. • 7. Penalties for Non-compliance: • LLPs failing to file their income tax returns within the due date are liable to pay a penalty under Section 234F of the Income Tax Act. Late filing penalties range from Rs. 1,000 to Rs. 10,000, depending on the delay period and the LLP's turnover. • Filing Income Tax Returns is a crucial obligation for LLPs in India to ensure compliance with taxation laws. By understanding the rules and procedures outlined by the Income Tax Department, LLPs can fulfill their tax obligations efficiently and avoid penalties. Adhering to deadlines, maintaining accurate financial records, and seeking professional assistance when necessary are key practices for smooth LLP ITR filing in India. TYPES OF LLPs Equal Rights This is an LLP with two or more partners having equal rights/powers with respect to profits/losses as well as decision-making authority (1:1 basis). This type of agreement will be applicable if all partners in an LLP contribute equally to the LLP and have the same rights including management rights. In this type of LLP, all partners will be working partners and receive the same remuneration.  LLP Agreement wherein rights are in the ratio of contribution and profit share Absolute Rights https://www.sumeetmahajanandassociates.com/llp-annual-filings 7/10

8. 4/30/24, 12:08 PM Limited Liability Partnership (LLP) Annual Filing If an LLP is incorporated with by two persons and only one person is appointed as the nominee or in some cases only as the investor. The agreement needs to be drafted in such a way that one person will get all the management as well as decision making power. Equal Right and Differential Power An LLP with more than two partners, each having equal rights, is an Equal Rights LLP. For operational efficiency, this type of LLP agreement typically delegates specific powers to selected partner(s), subject to receiving unanimous consent from all partners. In this type of LLP, partners have equal rights in all aspects; however, by an LLP Agreement, some specific powers are given to particular partners. Husband & Wife An LLP with a husband and wife as partners; such an agreement can have a structure similar to any of the three LLP agreements listed above. Additionally, a special agreement pertaining to tax liability given the LLP partners’ personal relationship is required. We have structured this type of LLP Agreement to meet their goals to minimum family tax liability. Board Managed This is an LLP with multiple partners and the business is managed by a committee of partners, similar to a company’s Board of Directors. While overall control is exercised by all LLP partners, day-to-day management and decision-making is handled by the committee/board. Frequently Asked Questions Ques: Is Professional Certification necessary for Filings Form 11? Ans: Professional certification may be necessary under certain circumstances. If the LLP's annual turnover exceeds Rs.5 crores or if partners' capital contributions surpass Rs.5 lakhs in a single year, professional certification might be required. Ques: Are all LLPs required to file ITR? Ans: Yes, all Limited Liability Partnerships (LLPs) registered in India must file Income Tax Returns (ITRs) annually, irrespective of whether they have taxable income or not. https://www.sumeetmahajanandassociates.com/llp-annual-filings 8/10

9. 4/30/24, 12:08 PM Limited Liability Partnership (LLP) Annual Filing Ques: What documents are necessary for LLP ITR Filings? Ans: The documents needed for LLP Income Tax Return (ITR) Filings are: • Financial statements like the Balance Sheet, Profit and Loss Account, and Auditor's Report (if applicable). • Partner details, including their PAN (Permanent Account Number) and capital contributions. • Bank statements and supporting documents for income and expenses. • Any other relevant documents concerning income, deductions, taxes paid, etc. Ques: What are the consequences of missing the LLP ITR deadline? Ans: If you miss the LLP Income Tax Return (ITR) Filings deadline, you may face penalties and late fees imposed by the Income Tax Department. The penalty to ₹10,000, depending on the delay. Additionally, interest may be levied on any outstanding tax liability. for late Filings can range from ₹5,000 Ques: How can I check the status of my Form 11 Filings? Ans: LLPs can track the status of their Form 11 Filings using the Service Request Number (SRN) generated upon submission. This SRN acts as a reference for future correspondence with the Ministry of Corporate Affairs (MCA) and enables monitoring of the Filings process's progress. Ques: Can the deadline for Form 11 Filings be extended? Ans: In exceptional circumstances or unforeseen events, the Registrar of Companies may grant extensions for Filings annual returns. However, such extensions are subject to specific conditions and require an application by the LLP. Ques: What are the penalties for non-compliance with Form 11 and Form 8 Filings requirements? Ans: Failure to adhere to the prescribed due date for Filings Form 11 may result in penalties of ₹100 per day of delay, with no maximum limit. https://www.sumeetmahajanandassociates.com/llp-annual-filings 9/10

10. 4/30/24, 12:08 PM Limited Liability Partnership (LLP) Annual Filing https://www.sumeetmahajanandassociates.com/llp-annual-filings 10/10