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The Ministry of Corporate Affairs (MCA) governs all LLPsin India under the LLP Act 2010. All Limited liability partnerships registered in India are required to submit annual MCA returns and income tax returns each year. All LPP registered in India are required to comply with various regulations. Failure to comply may result in a penalty.
LLPs in India should file their annual tax return within 60 days from end of the financial year and the Statement of Account & Solvency within 30 days from end of financial year. Unlike companies, LLPs are expected to maintain their financial year. In addition the LLPs are expected to file income tax every year
Annual compliance provides a company with greater credibility for loan approval or some other related criteria.
LLP’s annual compliance filings provide many businesses with information of their financial worth, which may contribute to new and interested investors.
LLPs are not declared as defunct with routine filings, and remain active. Annual compliance reports are also mandatory and may involve fines (additional fees) for LLPs when reports are defaulted.
Regular annual compliance filings promote faster transfer of Limited Liability Partnerships to other forms of companies, as well as quicker settlements in the event of partnership breakup.
All LLPs are expected to maintain appropriate accounts after registration on a cash basis or on an accrual basis. Private Limited Companies are expected to keep an account book only on an accrual basis; however, LLPs do have the option of keeping an account book on a cash basis.
The ledger of records must be maintained at the LLP Registered Office which must provide reports about all the money earned which spent, the assets and liabilities, the COGS document, the inventories and the finished product document. At the end of each financial year, all LLPs are expected to file their financial statements within 6 months for submission to the ROC.
The annual LLP return is due within 60 days of the end of the financial year. The LLPs will enforce a standardized financial year beginning on 1 April and concluding on 31 March, hence the annual return of the LLP is expected on or before 30 May of each financial year.
Form 11 includes information of the number of partners, the average amount of partners, the overall support earned from both partners, descriptions of the organizational entity as partners and a description of the partners. All LLPs will file this form with the agreed charge within 60 days of the end of the financial year. The due date for filing LLP Form 11 is then 30 May of each year.
The declaration of accounting and solvency of the LLP shall be expected within 30 days from the close of the six months following the end of the financial year. Accounting and Solvency Statement is a compulsory filing that is required for all LLPs in India. Statement of Accounting and Solvency requires a Declaration of Solvency of the LLP by the appointed parties, as well as facts relating to the declaration of assets and the Liabilities.
Form 8 must be submitted within 30 days from the end of 6 months of the financial year, along with a specified charge. It will be digitally signed by 2 approved parties and accredited by a chartered accountant / company secretary / cost accountant. Form 8 includes the Declaration of Solvency, Declaration of Assets and Summary of Revenue & Spending
LLPs are required to have their reports audited by the Chartered Accountant if their gross revenue of any financial year reaches Rs.40 lakhs or if their investment reaches Rs.25 lakhs. In order to avail the exemption from audit, the LLPs accounts filed with the ROC must contain a statement by the Partners to the effect that the Partners acknowledge their responsibilities for complying with the requirements with respect to accounting and preparation of financial statements.
LLPs will submit an income tax report using the ITR 5 type. Form ITR 5 may be sent electronically via the income tax platform using the digital signature of the approved party. The LLP tax filing deadline in India is 31 July, unless a tax audit is needed. LLP whose revenue has crossed Rs. 40 Lakh or whose investment has crossed Rs. 25 Lakh is expected to have their reports audited under the Chartered Accountant in place.
LLP book of accounts includes Statement of Accounts and Solvency. The Statement of Account and Solvency is prepared through the filling of Form 8.
This includes preparing general-purpose financial statements; which includes the balance sheet, income statement, statement of Profit & Loss, and statement of cash flows.
Statutory audits performed by qualified auditors are conducted in order to report the state of finances and accounts of an LLP to the Indian government. .
LLPs incorporated under LLP Act 2008 need to E-File the LLP Form 8 and LLP Form 11 for financial statements with the Registrar of Companies (ROC).
LLPs that are applicable for tax audit are required to file income tax returns each year on or before 30th September. Others have to file till 31st July..
Every LLP incorporated under the LLP Act, 2008 are required maintain certain records about the company in the form of statutory registers.