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Taxation of LLPs

Taxation of LLPs is governed by the Income Tax Act, 1961, as amended by the Finance Act, 2009 which introduced provisions for the taxation of LLPs (effective from assessment year 1 April 2010 to 31 March 2011):

LLPs shall be taxed in the same manner as partnerships, that is, income of shall be taxed in the hands of the LLP, and remuneration to partners shall be exempted.


The Finance Act made the following changes to the Income-tax Act, 1961:
(i) the word ‘partner’ would include a partner of an LLP
(ii) ‘firm’ would include an LLP and
(iii) ‘partnership’ would include an LLP

Filing tax returns

The designated partner shall sign the income tax return of an LLP, or where, for any unavoidable reason such designated partner is not able to sign the return or where there is no designated partner as such, any partner shall sign the return.


Liability for tax payments in case of liquidation: In case of liquidation of an LLP, every partner will be jointly and severally liable for payment of tax unless he proves that non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part.


Consequences of filing documents late or violating other provisions of the LLP Act

For defaults/non-compliance on procedural matters such as time limits for filing requirements provisions have been made for charging default fees (on daily basis), say, for example, at the rate of Rs. 100/day after the expiry of the date of filing upto a period of three hundred days. Charging of such default fees would, however, be in addition to any other action or liability under the Act, if the filing is made beyond the expiry of three hundred days.


For any offences under the LLP Act, punishments are provided either:
(i) by way of imposition of fine, or
(ii) by imposition of fine as well as imprisonment of the offender.


Imprisonment has been provided for:

(i) making of a false statement at the time of incorporation of LLP by an person,

(ii) carrying on business of LLP with
         a) intent to defraud, or
         b) for any fraudulent purposes, and

(iii) making false statements or omitting any material fact with the knowledge that the concerned statement is false or material, in any regulatory filing or return that is prepared as per the Act.


The offences which are punishable with fine only can be compounded by the Central Government, by collecting a sum not exceeding the amount of maximum fine prescribed for the offence.


Note: Address of Registrar and helpline numbers
Office of Registrar (for registration, etc. of LLPs):
3rd Floor, Paryavaran Bhavan, CGO Complex, New Delhi-3.
E-Mail: llpsupport-mca@nic.in
Ph: 011-66336666


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