LLP Annual Filing of Tax In India
A Limited Liability Partnership (LLP) is a type of partnership where several members possess limited liability. LLP annual filing must be done regularly to preserve compliance and avoid facing harsh legal penalties for non-compliance.
The number of compliances that must be adhered to by a limited liability partnership each year is remarkably minimal in comparison to the compliance obligations imposed on limited private corporations.
LLPs are obligated to submit LLP annual filing and details of the accounting statements, and failure to do so could lead to a hefty amount of fine.
While non-compliance may only result in fines of Rs 1 lakh for a Private Limited firm, it may result in fines of Rs.5 lakh in the case of an LLP.
LLP annual filing must be done 60 days before the completion of each fiscal year, and their account statement and solvency 30 days before the conclusion of the six-month period after the fiscal year’s end.
In this article, we will discuss the LLP Annual Filing, Account Statement and Solvency reports filing, and Income Tax Returns in India.
Meaning of LLP Annual Filing
LLP Annual Filing is a very important phase that the Limited Liability Partnership firms have to go through. The LLPs that have already been enrolled with the MCA must submit their LLP annual filing and account statements regularly.
Two ROC forms need to be prepared and submitted annually to the Registrar of Companies. LLPs are also required to submit an income tax return annually in addition to the MCA annual form.
There are 3 important compliances with LLP Annual Filing:
- Filing yearly returns of the LLP.
- Filing LLPs financial statements.
- The filing of income tax returns.
LLP Annual Filing
- LLP annual filing is done through Form 11. Every LLP is obliged to submit their LLP annual filing reports via Form 11 to the Registrar within sixty days of the completion of the fiscal year, i.e., the LLP annual filing must be done either before or on 30th May of the fiscal year.
- This form serves as an overview of the LLP’s administration practices, including the list of shareholders and their respective names.
Filing Account Statements and Solvency
- The registered LLPs are obliged to keep the firm’s books of accounts, which detail the revenue generated in addition to other useful accounting information about the company, and file it on Form 8 of each fiscal year.
- Form 8 provides information about the Financial Statements and solvency of the firm. A minimum of two Authorized Members must file Form 8 with the Registrar of Companies(ROC) by 30th October of a fiscal year.
- Form 8 should be properly signed and validated by authorized members. Additionally, it must be authenticated by a licensed chartered accountant or secretary. Failure to submit the financial and solvency reports on time will lead to a charge of INR 100 daily.
Filing Income Tax Returns
- Each LLP is required to submit Income Tax Returns annually regardless of the LLP’s operations. LLPs are exempt from having their financial statements audited if their annual contributions or revenue do not exceed INR 25 lakh or INR 40 lakh, respectively.
- Hence, the ITR filing deadline is the 31st of July in circumstances when the LLPs tax audit is not necessary. However, according to the LLP Act, 2008, LLPs must have their books of accounts audited by a qualified CA if their revenue exceeds Rs. 40 lakh or their contribution exceeds Rs. 25 lakh.
- The ITR filing due date for an LLP that needs to have its financial records audited is the 30th of September. LLPs must use Form ITR 5 in order to submit their income tax returns. The authorized member’s electronic signature could be used to submit this form electronically via the income tax portal.
Advantages of LLP annual filing
Enhanced Credibility
LLP annual filing compliance provides the firm with enhanced credibility when it comes to credit approval or other comparable needs.
More Investments
LLP annual filings give other businesses information on the financial potential of the firm, which could lead to more investments by investors.
Keep LLPs Operational
Periodic LLP annual filing ensures that the LLPs are operational and prevent them from being deemed inactive.
Avoids Penalties
LLPs who fail to submit their yearly compliance reports are subject to penalties. Hence, regular LLP annual filing may avoid heavy penalties.
Transition or Shutdown
Periodic LLP annual filing allows LLPs to dissolve more quickly and easily and convert into certain sorts of corporations more easily.
Necessary documentation for LLP annual filing
The following documentation can be used for LLP annual filing:
1. Form 8
Accounting Statement and Solvency are filed using Form 8. It can be filed within 30 days of the conclusion of the 6 months following the completion of the fiscal year.
This form may be electronically signed by a minimum of two specified members of the firm. Additionally, the same needs to be validated by either a company secretary or an accountant. Form 8 is divided into two sections, which are:
- Part A- The solvency declaration
- Part B- Statements of Revenue & Expenditures and Accounts.
A charge of Rs 100 daily shall be assessed for failing to submit Form 8 before the deadline.
2. Form 11
Form 11 includes information about each Designated Partner along with details about any changes in the LLP’s administration. All LLPs are required to submit Form 11 together with the required application charge within 60 days of the conclusion of the fiscal year.
As a result, LLPs should complete the filing of Form 11 by the 30th of May of the following year.
An LLP cannot be wound up or closed until all of its yearly returns have been filed. Thus, in order to avoid paying charges, all LLPs should submit their yearly returns on schedule.
3. Form ITR-5
There are two sections on the ITR 5 Form
- Part A- In Part A of the ITR Form, the various information such as earnings and losses account data, manufacturing data, and other relevant data are provided.
- Part B- In Part B of the ITR Form, information about the calculation of annual revenue and how much tax was due on that entire amount of revenue is included.
Deadline for LLP Annual Filing
The deadline for the returns that an LLP must submit during a fiscal year are as follows:
| Form | Details | Deadline | With whom to file? |
|---|---|---|---|
| Form 8 | Filing of Account Statement and Solvency Report | 30 October | Registrar of Companies |
| Form 11 | Filing of Annual Returns | 30 May | Registrar of Companies |
| Form ITR-5 | Filing of Income Tax Returns | - 30 September if tax audit is necessary - 31 July, if tax audit is not necessary | Department of Income Tax |
Late filing penalties for forms LLP 8 and LLP 11
An LLP would be required to cover a penalty of Rs. 100 each day per form if it does not submit its yearly filing forms within the required time frame. The penalty will remain in effect from the time the return has to be submitted until it is actually completed.
An LLP’s designated partners are in charge of keeping accurate books of accounts and submitting a yearly report to the MCA for each fiscal year. It is recommended for LLPs submit their LLP Form 8 and LLP Form 11 within the deadlines in order to avoid consequences.
Conclusion
LLPs must adhere to a number of legal requirements, which includes filing yearly tax filings. To achieve their regulatory obligations, LLPs in India must adhere to the annual tax filing requirements. Periodic LLP annual filing is crucial in order to maintain compliance and prevent harsh legal repercussions for non-compliance.
You can consult Odint Consultancy with any queries related to LLP annual filing. We will help you with your queries.
FAQ’s
- Filing yearly returns of the LLP.
- Filing LLPs financial statements.
- The filing of income tax returns.
- A charge of Rs 100 daily shall be assessed for failing to submit Form 8 before the deadline.
- An LLP cannot be wound up or closed until its yearly returns have been filed.
Form 8 is for filing of Account Statement and Solvency Report on 30 October.
Form 11 is for filing annual returns in India, and the deadline is 30 May.
- 30 September if tax audit is necessary
- 31 July if tax audit is not necessary
