LLP i.e. Limited Liability Partnership is among the robust company structures that ensure perpetuity and controlled liabilities for members. Falling under the LLP Act 2008, LLP attracts a handful of operational compliances. Adherence to these norms is paramount to keep the company up and running. This article explores key LLP compliances so that you can keep up with them, avoiding severe penalties.
Key LLP Compliances: Underlining Mandatory Operational Norms
Limited Liability Partnership is helmed by the elected members within the purview of the LLP Act 2008. These members are liable to manage a book of accounts and file annual returns annually with the governing body i.e. Ministry of Corporate Affairs (MCA).
Due diligence of Books of Account
LLPs with annual turnover less than Rs 40 lakh are not liable to audit their books of account. This rule also applies to LLPs who have made contributions of less than Rs 25 lakhs.
Filing of a Statement of Account & Solvency
Among other key LLP compliances include the filing of a Statement of Account & Solvency, which must be completed within 30 days from the date on which six months of the FY ends. Further, there is also a requirement to file an annual return, which must be completed within 60 days, starting from the date FY ends.
All LLPs must maintain FY from 1st April to 31st March. Therefore, the filing of the Statement of Account & Solvency should be completed on or before October 30th of the FY. The annual return filing must be completed on or before May 30th. Adherence to these filings is mandatory regardless of whether the LLP is operational or not.
Statements of Accounts and Solvency
Another key LLP compliances includes the apt management of books of accounts, which also involves adding profit earned and other key data. The same must be conveyed to the authority via Form 8 every year. The said form must enclose the partners’ signature and CA’s approval. Non-filing or delayed filing could result in a Rs 100/day penalty. The filing of the Form 8 is due on the Oct 30 of every FY.
Filing Annual Return
Form 11 is used for filing annual returns. This form encloses key information about the management, including a number of partners and their details. The due date for filing such a form is on the 30th of May every year.
Audit requirements under the Income Tax Act
LLPs with an annual turnover and contribution exceeding Rs.40 lakh and Rs.25 Lakh, respectively must abide by the audit requirements, which include due diligence of books of account performed by certified CA. The deadline for such a requirement is set out on Sep 30th.
Note: The threshold limit concerning tax audit has been increased from Rs 1 crore to Rs 5 crore w.e.f AY 2021-22. This condition applies if:
- The taxpayer’s receipts do not exceed the 5% threshold of the turnover
- The taxpayer’s cash payments do not surpass 5% of the aggregate payments under the IT Act 1961.
For LLPs where the deadline concerning the tax audit does not exist, the filing date for the tax return is due on July 31st.
Form 3CEB
Filing of Form 3CEB is mandatory for LLPs dealing with domestic or cross-border transactions. The said form must have a CA authorization. LLPs mandatorily required to file this form must ensure their tax filing by 30th November.
Form ITR 5
Filing Form ITR 5 is paramount for LLPs to reveal their taxable income to the tax authority. LLPs can visit the tax authority’s portal to file this vital form. It is noteworthy that while filing Form ITR 5, partners must attract their DSC i.e. digital signature certificate.
Frequently Asked Questions concerning LLP compliances
Q1: Is filing annual returns mandatory for LLPs formed close to year-end?
A: LLPs formed after 1 October must file their annual return by the subsequent due date i.e. 31 March 2021. Likewise, LLPs incorporated after March 31st can file their return within 18 months.
Q2: What penalty comes into play for non-filing of Form 8?
A: Non-filing can result in a daily penalty of Rs 100.
Q3: What details do I need to enclose in the Form 8?
A. Form 8 refers to a Statement of Account and Solvency, which must enclose financial transactions of the current FY year. Plus, this form must reflect the declaration:
- If the turnover is above or below the given threshold i.e. 40 lakhs
- Concerning the creation of charges/modification/satisfaction
- Concerning the commitment to ensuring apt management of books of account.
Q4: What are the key enclosures to Form 8?
The following documents must serve as an enclosure to the Form 8:
- Disclosure under MSME Development Act, 2006
- Statement concerning contingent liabilities if any
- Any other relevant information
Q5: Who must authenticate the Form 8?
Form 8 seeks attestation from at least two elected partners if the LLP’s turnover and contribution is below or equal to the threshold i.e. Rs 40 lakhs and Rs 25 lakhs, respectively. On the contrary, if the LLPs surpass the given thresholds, form 8 must enclose the auditor’s approval.
Q6: What if I failed to file the Form 11?
The non-filing of Form 11 may lead to a daily fine of Rs 100, which could increase over time.
Q 7: What are key enclosures to Form 11?
Form 11 refers to a statement concerning partner information and contributions made. Plus, the form must reflect the companies wherein the elected partners serve the same position. The contribution cited in Form 11 should be akin to the figure mentioned in Form 8.
Q 8: Whose authorization is vital to Form 11?
Form 11 seeks the authorization of the designed partner if the contribution threshold of LLP stays below the threshold i.e. Rs 50 lakh. Likewise, LLPs surpassing such threshold must file form 11 with the authorization of CS.
Conclusion
It is evident that adhering to LLP compliances can be taxing for newly incorporated companies. Therefore, a proper grasp of the above information is vital to stay penalty-free. If you seek other ways to fulfill LLP compliances, partnering with Adviso can be your best bet.
Adviso is a pioneering platform for your registration and compliance woes. From compliance support, and global incorporation, to IPR, Adviso offers all-encompassing services to clients globally.
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