What is LLP And Its Yearly ComplianceÂ
Shivang Goyal
Shivang Goyal is a Practicing Company Secretary,with over a decade of experience in the field of corporate law, his expertise lies in managing corporate actions and ensuring routine compliance for listed companies, making him a trusted professional in the domains of the Companies Act and Securities Law.
Shivang’s deep understanding of regulatory frameworks and his commitment to excellence have established him as a go-to expert for navigating complex corporate governance challenges.
In India, the Limited Liability Partnership (LLP) structure has become a popular choice for small and medium-sized businesses due to its hybrid nature — combining the flexibility of a partnership with the limited liability benefits of a company. However, many business owners overlook one crucial aspect of running an LLP: yearly compliance.
Ignoring your LLP’s compliance requirements can result in hefty penalties, legal trouble, and even the eventual striking off of the LLP by the Ministry of Corporate Affairs (MCA). This blog will walk you through the essential annual compliance obligations of an LLP, penalties for non-compliance, due dates, and tips for staying compliant.
What is an LLP?
A Limited Liability Partnership (LLP) is a legal business structure governed by the LLP Act, 2008, offering benefits such as:
- Separate legal identity
- Limited liability protection to its partners
- Flexible internal management
- Lower compliance burden compared to companies
LLPs are especially suitable for professional firms, startups, and consultancy businesses.
Overview of Yearly Compliance Requirements for LLPs
Every LLP registered under the LLP Act, 2008, is required to comply with annual filings and maintain proper records, regardless of whether it has conducted business during the year.
Compliance | Description | Due Date | Applicable Form |
Annual Return | Filing of partner details and changes | Within 60 days from the end of the financial year (i.e., May 30) | Form 11 |
Statement of Account & Solvency | Financial details, solvency status of LLP | Within 180 days from the end of the financial year (i.e., October 30) | Form 8 |
Income Tax Return | Filing income and tax-related information | July 31 (non-audit case); October 31 (audit case) | ITR-5 |
Audit (if applicable) | Statutory audit of accounts | If turnover > ₹40 lakhs or contribution > ₹25 lakhs | Audit Report |
Form 11: Annual Return of LLP
This is the first mandatory annual compliance for an LLP.
- It must be filed within 60 days from the closure of the financial year.
- The financial year for all LLPs ends on March 31, so the due date is May 30.
- It contains details of:
- Partners (Designated & Others)
- Capital contributions
- Changes in management (if any)
Applicability:
- All LLPs must file Form 11, irrespective of turnover or business activity.
Penalty for Non-Filing:
- ₹100 per day of delay with no maximum cap.
Form 8: Statement of Account and Solvency
This form declares the financial position and solvency status of the LLP.
Due Date:
- To be filed within 180 days of the financial year-end, i.e., by October 30.
Contents of Form 8:
- Statement of Assets and Liabilities
- Statement of Income and Expenditure
- Declaration of Solvency by Designated Partners
Applicability of Audit:
1. Mandatory if:
a. Turnover > ₹40 lakhs, or
b. Capital Contribution > ₹25 lakhs
In such cases, the accounts must be audited by a Chartered Accountant.
Penalty for Non-Filing:
a. ₹100 per day of delay without any maximum cap
Income Tax Return (ITR-5)
LLPs must file their income tax returns annually, even if there is no income or business activity.
Applicable Form:
a. ITR-5
Due Dates:
a. July 31 – For LLPs not requiring audit
b. October 31 – For LLPs requiring audit
Audit Requirement under Income Tax:
A)Mandatory if:
a. Turnover exceeds ₹1 crore
b. Professional receipts exceed ₹50 lakhs
c. If opted for Presumptive Taxation Scheme, no audit required unless the LLP opts out.
Tax Rate:
- Flat 30% on income + surcharge and cess as applicable
Other Possible Compliances
Besides the main three (Form 11, Form 8, ITR), some LLPs may have additional compliance requirements:
GST Filing:
- If LLP is registered under GST, regular filing of GSTR-1, GSTR-3B, and annual return is mandatory.
TDS Return Filing:
- If LLP deducts tax at source, quarterly TDS returns in Form 26Q must be filed.
DIR-3 KYC:
- Every Designated Partner holding a DIN must file DIR-3 KYC annually.
 MCA Notifications and Resolutions:
- Any change in:
a. Partner details
b. Contribution amount
c. Business activity
Must be reported through appropriate forms like Form 3, Form 4, etc.
Important Due Dates Summary
Compliance | Form | Due Date |
Annual Return | Form 11 | 30th May |
Statement of Accounts | Form 8 | 30th October |
Income Tax Return | ITR-5 | 31st July / 31st October |
Audit Report (if applicable) | NA | Along with ITR filing |
DIR-3 KYC | NA | 30th September |
GST Returns | GSTR-1/3B | Monthly/Quarterly |
TDS Return | Form 26Q | Quarterly |
Penalties for Non-Compliance
One of the strict aspects of LLP compliance is the penalty regime, which is levied per day without any maximum limit in many cases.
Common Penalties:
- Form 11 / Form 8 Delay: ₹100/day each
- ITR Delay:
a. ₹5,000 if filed after due date but before Dec 31
b. ₹10,000 if filed after Dec 31
c. Additional interest on tax dues
Consequences of Continuous Non-Compliance:
- LLP may be marked as ‘Defaulter’ on MCA portal
- Inability to obtain compliance certificates or loans
- ROC may strike off the LLP
- Designated Partners may be disqualified
Benefits of Timely Compliance
Remaining compliant isn’t just about avoiding penalties. It offers strategic advantages:
Better Credibility:
- Helps build trust with clients, vendors, and banks.
Easier Loan Approvals:
- Banks require compliance documents for credit evaluation.
Business Continuity:
- Reduces risk of legal actions or dissolution.
Government Tenders:
- Many tenders require up-to-date compliance proof.
Tips to Stay Compliant
- Maintain Updated Books: Keep financial records updated monthly.
- Calendar Reminders: Set due date alerts.
- Hire a CA/CS: Professional support can prevent mistakes.
- Use Compliance Software: Many tools send automated reminders.
- Avoid Last-Minute Filings: Portal issues and audit delays are common close to due dates.
Conclusion
An LLP may be simpler to run than a private limited company, but it is not free from legal responsibilities. Yearly compliance is a legal necessity — not a formality. With just three core filings (Form 11, Form 8, and ITR), staying compliant is easy if planned in advance.
Avoid penalties, protect your business reputation, and pave the way for future growth by ensuring your LLP is compliant every year.
For any clarifications or queries, please feel free to reach out to us at admin@fintracadvisors.com
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