What is LLP Compliance?
LLP compliance refers to the statutory obligations that every Limited Liability Partnership (LLP) in India must fulfill to maintain its legal status. Governed by the Limited Liability Partnership Act, 2008, these compliances ensure transparency, accountability, and good governance.
Unlike private limited companies, LLPs enjoy a simpler compliance regime, but adhering to the deadlines is critical to avoid hefty penalties.
Mandatory Annual Compliances
Every LLP, irrespective of its turnover or business activity, must file the following forms annually:
1. Form 11 (Annual Return)
Purpose: To report the summary of partners, their contributions, and management details.
Due Date: 30th May (within 60 days of the financial year-end).
2. Form 8 (Statement of Account & Solvency)
Purpose: To declare the financial position, assets, liabilities, and solvency of the LLP.
Due Date: 30th October (within 30 days from the end of six months of the financial year closure).
3. Income Tax Return (ITR)
Purpose: To report income and pay taxes.
Due Date: 31st July (if audit not required) or 31st October (if audit required).
4. DIR-3 KYC
Purpose: Annual KYC for all Designated Partners holding a DIN.
Due Date: 30th September.
Audit Requirements for LLP
An audit of LLP accounts by a practicing Chartered Accountant is mandatory only if:
- The Annual Turnover exceeds ₹40 Lakhs, OR
- The Total Capital Contribution by partners exceeds ₹25 Lakhs.
If your LLP falls below these thresholds, you can file self-certified accounts.
Event-Based Compliances
Apart from annual filings, certain events trigger compliance requirements:
- Change in Partners: Filing Form 4 within 30 days of appointment, resignation, or death.
- Change in LLP Agreement: Filing Form 3 within 30 days of any amendment to the agreement.
- Change of Registered Office: Filing Form 15 within 30 days of shifting the office.
- Change in Name: Filing Form 5 for name change approval.
Consequences of Non-Compliance
Failing to meet compliance deadlines can be costly:
- Late Fees: A flat penalty of ₹100 per day per form is levied for delay in filing Form 8 or Form 11. There is no upper limit on this penalty.
- Strike Off: The MCA may declare the LLP as "defunct" and strike off its name from the register.
- Personal Liability: Designated partners can face disqualification and personal fines.
- Prosecution: In severe cases, criminal proceedings may be initiated against the partners.
Benefits of Timely Compliance
- Avoid Penalties: Save money by avoiding the ₹100/day late fee.
- Active Status: Maintains the "Active" status of your LLP on the MCA portal.
- Credibility: Enhances trust with banks, investors, and vendors.
- Easier Loans: Compliant LLPs find it easier to secure bank loans and funding.
- Smooth Closure: Easier to wind up the business if all past compliances are up to date.
