Handbook -Compliance by LLP After Incorporation

1. E-Lawyering Re-Defined
Handbook:
Compliance by LLP
After Incorporation
CompaniesInn Solutions Private Limited
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Phone: +91 80 3025 5900;
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Table of Contents
11 LLiimmiitteedd LLiiaabbiilliittyy PPaarrttnneerrsshhiipp -- LLLLPP ....................................................................................................................................................................................................33
1.1 LLP Concepts: ................................................................................................................................................................................... 3
1.1.1 Partners ................................................................................................................................................................................... 3
1.1.2 Designated Partners .............................................................................................................................................................. 3
1.1.3 Concept of Limited Liability................................................................................................................................................. 3
1.1.4 LLP Agreement...................................................................................................................................................................... 3
1.2 Management and Administration of LLP...................................................................................................................................... 3
1.3 Corporate Compliances: Classification.......................................................................................................................................... 4
22 LLLLPP AAcctt aanndd RRuulleess ..............................................................................................................................................................................................................................................................44
2.1 LLP Annual Filings with ROC ........................................................................................................................................................ 4
2.1.1 Yearly / Periodical Filing....................................................................................................................................................... 4
2.1.2 Event based Filings................................................................................................................................................................ 5
2.2 LLP Agreement................................................................................................................................................................................. 5
2.3 Statutory Registers and Records by LLP........................................................................................................................................ 5
33 AAccccoouunnttiinngg........................................................................................................................................................................................................................................................................................55
3.1 Maintenance of Vouchers ................................................................................................................................................................ 5
3.2 Data Entry to Accounting Software................................................................................................................................................ 5
44 AAuuddiitt ooff AAccccoouunnttss ................................................................................................................................................................................................................................................................66
4.1 LLP Act .............................................................................................................................................................................................. 6
4.2 Income Tax Act ................................................................................................................................................................................. 6
55 IInnccoommee TTaaxx:: RReeggiissttrraattiioonnss && CCoommpplliiaanncceess..............................................................................................................................................................................66
5.1 Income Tax Registrations................................................................................................................................................................. 6
5.1.1 Permanent Account Number (PAN) ................................................................................................................................... 6
5.1.2 Tax Deduction and Collection Account Number (TAN) .................................................................................................. 6
5.2 Income Tax Compliances................................................................................................................................................................. 6
5.2.1 Tax Deduction / Collection at Source (TDS/TCS) and filing of Returns.......................................................................... 6
5.2.2 Advance Tax Payments......................................................................................................................................................... 7
5.2.3 Filing of Income Tax Returns ............................................................................................................................................... 7
66 SSeerrvviiccee TTaaxx ........................................................................................................................................................................................................................................................................................77
6.1 Registration Requirements .............................................................................................................................................................. 7
6.2 Payment of Service Tax.................................................................................................................................................................... 7
6.3 Filing of Service Tax Returns........................................................................................................................................................... 7
77 VVaalluuee AAddddeedd TTaaxx ((VVAATT)) ..........................................................................................................................................................................................................................................88
7.1 Payment of VAT ............................................................................................................................................................................... 8
7.2 Filing of VAT Returns...................................................................................................................................................................... 8
88 SShhoopp aanndd EEssttaabblliisshhmmeenntt RReeggiissttrraattiioonn ..............................................................................................................................................................................................88
99 PPrrooffeessssiioonnaall TTaaxx ......................................................................................................................................................................................................................................................................99
1100 IImmppoorrtteerr EExxppoorrtteerr CCooddee ((IIEECC))........................................................................................................................................................................................................................99

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1 Limited Liability Partnership - LLP
A Limited Liability Partnership (LLP) is an incorporated business form that combines the features of
partnership and the LLP form of business. The LLP form of organisation was introduced in India in April
2009 through the Limited Liability Partnership Act, 2008.
1.1 LLP Concepts:
1.1.1 Partners
Partner(s) are the persons who invest capital and holds shares in a LLP. Partners are the ultimate owners of
the LLP. A person becomes a partner in the LLP in accordance with LLP agreement.
1.1.2 Designated Partners
Designated partners are responsible for the doing all acts and things that are required to be carried out by the
LLP in respect of compliance of the provisions and filing of documents/returns/statements under the LLP Act
and things as may be specified in the LLP agreement. Every partner need not be a designated partner of the
LLP.
Unlike Company, Designated Partners does not have any managerial powers like the Directors of the
Company unless specifically authorised by the LLP Agreement.
1.1.3 Concept of Limited Liability
Limited liability means that the personal financial liability of an investor in a business limited to the extent of
a fixed amount that one has agreed to invest in a LLP. In other words, the investor is not personally liable for
the business debts and liabilities of the Limited Liability Partnership.
In the unfortunate event of winding up of the business, the investor's liability is limited to the unpaid amount
of agreed contribution by shares or otherwise.
1.1.4 LLP Agreement
LLP Agreement is an agreement with Partners and LLP describing the mutual rights and duties of each
partner, the relationships among individual partners and that of each partner with the LLP. The usual
elements that can be defined upfront with an LLP Agreement include management and operating
procedures, addition of new partners, decision-making methodologies, etc.
The LLP Agreement can be amended by the partners as per the process specified in the agreement.
1.2 Management and Administration of LLP
Being a registered entity, LLP is treated as an artificial legal person in relation to regulatory compliance
provisions. After registration, an LLP has to comply with the legal and regulatory requirements of various
laws. An LLP is administered primarily by the by the LLP Act, 2008 and Rules made there under. A LLP also
has to comply with the legal and regulatory requirements of various Laws depend on its business operations,
location and number of employees etc.
The partners are required to ensure the compliance of the provisions under the respective acts and rules
while conducting business activities and regulatory procedures. Corporate compliance is an essential part of
the corporate function of an LLP, failing which stringent penalties are imposed under the provisions of the
LLP Act.
For an LLP, compliance is ensured by way of filing of periodic and event-based returns with the ROC.

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1.3 Corporate Compliances: Classification
Corporate Compliance is an essential part of a corporate function failing which stringent penalties are
imposed under the provisions of LLP Act and other applicable Laws.
The general compliance requirement of LLP can be broadly classified in to:
1. LLP Act and Rules
2. LLP Agreement
3. Accounting and Audit
4. Taxation
5. Other Compliances - Specific to Business Category and Location
2 LLP Act and Rules
A Limited LLP has to comply and adhere to various legal process and procedures as required under the LLP
Act 2008 and Rules made there under.
The compliance process in a LLP is ensured by way of periodical filing of Returns with the office of Registrar
of Companies.
2.1 LLP Annual Filings with ROC
2.1.1 Yearly / Periodical Filing
All LLPs are mandatorily required to file the following Yearly returns whether it does business or not.
2.1.1.1 Filing of Annual Returns
An LLP is required to file its Annual Returns with the ROC (Form 11) within 60 days of closure of its
financial year.
Therefore, Annual Returns need to be filed on or before 30th May every year.
2.1.1.2 Filing of Annual Accounts
Every LLP has to maintain books of accounts as per double entry system of accounting and prepare a
Statement of Accounts and Solvency (Accounts) every year ending on 31st March.
LLPs registered on or before 30th September of a Year are required to close their financial year on
31st March of the following year. The LLP has to file such accounts with the Registrar of LLPs (Form
8) within 30 days from the end of 6 months of such financial year. Therefore, annual accounts need to
be filed on or before 30th October every year.
If the annual turnover exceeds Rs.40 lakhs or contribution exceeds Rs.25 lakhs, the LLP shall be
required to get its accounts audited by a qualified Chartered Accountant.
2.1.1.3 Penalty for Non Filing
Delay in filing the LLP Returns (Form 11 & Form 8) in time will attract a penalty of Rs.100 each per
day. Filing of returns is mandatory whether the LLP has done any business or not. In case of an LLP
not carrying any business, it is required to file a NIL return.

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2.1.2 Event based Filings
The following are few instances that require an LLP to file returns with the Registrar of Companies.
a) Changes in Partners/Designated Partners: Admission, Assignment of LLP Rights Resignation and
Removal thereof.
b) Increase / Reduction of capital contribution
c) Creation / Modification / Satisfaction of Charges
d) Change in Registered Office of the LLP
e) Process-related filing requirements
f) Change of LLP Name
2.2 LLP Agreement
The LLP Agreement describes the mode of management of an LLP. The partners have also to comply such
specific requirements in LLP Agreement, if any.
2.3 Statutory Registers and Records by LLP
Generally, an LLP is not required to maintain any registers as to Partners Deginated partners and its changes.
However, an LLP can add such specific conditions for maintaining Registers and Records and Minutes of
partner meeting in LLP Agreement. If the LLP Agreement prescribes for maintenance of Registers and
Records and Minutes of partner meeting, the partner and designated partners are bound to follow the
instructions and maintain such records.
3 Accounting
If finance is the life blood of Business, accounting is the function that of a heart. An LLP is required to
maintain proper books of accounts with respect to
 Sums of money received and expended
 Sales and purchase of goods and services
 Assets and liabilities
Every LLP has to maintain books of accounts and prepare a Statement of Accounts and Solvency (Accounts)
every year ending on 31st March. LLPs have the choice to select the appropriate accounting methods for
maintaining books such as double entry or cash based.
3.1 Maintenance of Vouchers
Accounting starts with every transaction of receipt or payment. It is advisable to the LLP to maintain
vouchers for every transaction. Well maintained vouchers will help the accountant to record the transactions
periodically, if not instantly.
3.2 Data Entry to Accounting Software
For due recording and retrieval of accounting data at any given point of time, it is advisable to use accounting
software like QuickBooks / Tally.

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4 Audit of Accounts
4.1 LLP Act
If an LLP’s annual turnover exceeds Rs.40 lakhs or whose contribution exceeds Rs.25 lakhs, it should get its
accounts audited by a qualified Chartered Accountant. The Audit of accounts by a Chartered Accountant is
not mandatory for other cases.
4.2 Income Tax Act
In case of LLP’s where annual turnover is Rs.100 Lakhs or more, there is an additional requirement of audit
under Income Tax Act by a Chartered Accountant and the report to be submitted along with the Annual Tax
Returns.
5 Income Tax: Registrations & Compliances
Income tax is a direct tax collected by the Central Government and is levied on all income other than
agricultural income on a person liable to pay such tax. LLP is a separate person different from its owners and
income of LLP is taxed at the hand of the LLP.
5.1 Income Tax Registrations
5.1.1 Permanent Account Number (PAN)
Permanent Account Number (PAN) issued by the Income Tax Department to a tax payer. All the Companies
are required to obtain PAN for Income Tax references. PAN is required as reference in many other instances
as well.
5.1.2 Tax Deduction and Collection Account Number (TAN)
Certain category of payments requires Tax Deduction at Source (TDS) and the tax so deducted must be
remitted to the Government of India. To enable TDS remittance, TAN is required. This can be obtained after
approval and issue of PAN.
5.2 Income Tax Compliances
5.2.1 Tax Deduction / Collection at Source (TDS/TCS) and filing of Returns
A LLP while making specific payments has to deduct tax at source. TDS is applicable to payments such as
Salary, Interest, Dividend, Rent, Fee for professional and technical services, Commission and brokerage etc.
The collection tax will be made at the source where income arises or accrues.
The Incomes Tax Act mandates the payer to deduct specific percentage from the payment and pay the
balance to recipient. The payer has to file quarterly returns to Income tax department with details of payee,
date of deduction and date of remittance to department etc. The due dates for filing TDS returns are as
follows:
Quarter Filing Due dates
First Quarter (April to June) July 15th
Second Quarter (July to Sept) October 15th
Third Quarter (Oct to Dec) January 15th
Fourth Quarter (Jan to March) May 15th
After payment of TDS to the Government, the LLP has to issue TDS Certificates periodically to the person
from whom the amount is deducted. Delay in filing the returns and issue of TDS Certificates attracts penalty.

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5.2.2 Advance Tax Payments
Income Tax laws mandate payment of Income Tax in Advance in case of assesses total tax liability
for a financial year exceeds Rs.10000 or more after deducting the tax deducted at source from the
gross tax payable on the current income. Schedule of Advance Tax Payment for Companies are as
follows:
Installment Due Date Percentage
First 15th September 30%
Second 15th December 60%
Third 15th March 100%
If the advance tax payment is not made in time, interest will be applicable for the delay in payment.
5.2.3 Filing of Income Tax Returns
As per Income Tax Act, LLP or LLP has to close its financial year as on 31st March every year and has to file
the returns with Income Tax Department. In case of LLP / LLP whose annual turnover is more than Rs.60
Lakhs, the accounts have to be audited as required under Income Tax Act as well. A LLP / LLP have to file its
Income tax Returns on or before the due dates as follows:
Audit Requirements Due Date
Where the accounts are not required to be
audited under any Law
31st July of every year
Where the accounts are subject to Audit under
any Law
30th September of every year or such other date as may
be notified by the Income Tax authorities.
6 Service Tax
Service tax is a tax levied on services rendered by a person and the responsibility of payment of the tax lies
with the service provider.
6.1 Registration Requirements
Requirement of Service Tax Registration by a LLP providing taxable services as follows:
 Turnover of taxable services exceeds Rs.9 lakh in the previous financial year
 Certain categories of service recipients
 Distribution of service if the turnover of taxable services exceeds Rs.9 lakh in the previous financial year
 Other compelling reasons such as requirement ST Registration for vendor enlistment from a customer.
6.2 Payment of Service Tax
After obtaining the ST Registration, the service provider has to collect service tax at the specified rate from the
recipient of services and has to pay to the government periodically. Service tax to be paid on or before 20th
day of the following month.
6.3 Filing of Service Tax Returns
All the Companies that are registered under Service tax has to file the ST returns, even if there no ST Billing
and Collection. The service provider has to file the return to Service Tax Department as follows:

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Periodicity Due Date
Monthly On or before 20th of the following month
Quarterly returns On or before 20th day of the following month after each quarter
Half yearly returns On or before 20th day of the following month after each half year
Yearly returns On or before 20th day of the following month after each Financial
year
If there is no billing and collection of ST, the LLP has to file a NIL Return in the referred intervals.
7 Value Added Tax (VAT)
LLP’s that are dealing with taxable goods and materials should register under VAT if the turnover of LLP
from taxable goods is above the exempted limits as prescribed under state VAT Rules.
Value Added Tax (VAT) or Sales Tax is a consumption tax levied on sale of taxable goods and materials. VAT
is a state specific registration and it is applicable to sales within the state as well as interstate sales. The seller
is liable to pay VAT to the government. As the name suggested this tax is levied on the value added on the
product by a dealer.
For example X sells a product at Rs.1100.00 (including 10% VAT) to Y. Y adds margin of Rs.200 and sells the
product to the customer at Rs.1320.00 (ie., 1200+10% VAT). Tax liability in this case is follows:
X to Government Rs.100.00 (10% of Rs.1000.00)
Y to Government Rs.20.00 (10% of Rs.1200 – Rs.100)
7.1 Payment of VAT
The amount of VAT collected should be paid to Government on monthly basis on or before 20th of day of the
following month.
7.2 Filing of VAT Returns
Filing of VAT Return has to be on or before 20th of day of the following month. If there is no billing and
collection of VAT, the LLP has to file a NIL Return in the referred intervals.
8 Shop and Establishment Registration
Every Commercial Establishment has to be registered under the respective State Labour Regulations within
30 days of commencement of work.
A Commercial Establishment means a business or trading or banking or insurance establishment, or an
establishment or administrative service in which persons employed or mainly engaged in office work, or a
hotel, restaurant, boarding or eating house, a cafe or any other refreshment house or a theatre, cinema or any
other place of public amusement or entertainment.
Every state has its own process and regulation for registration of Shops and Establishments to regulate
conditions of work and to provide for statutory obligations of the employers and rights of the employees in
un-organized sector of employment and other establishments in their jurisdiction.
Every business has to maintain the following records under Shops and Establishments Act:
 Registration Certificate under Shops and Establishments Act

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 Registers giving details of employment, fines, deductions and advances, salary, holidays, etc.
 Details of annual holidays, number of employees etc.
9 Professional Tax
This is a tax on employment and profession. Professional tax is imposed at the state level. LLP’s employing
people with stipulated salary shall have to obtain registration for Professional Tax.
The slab for professional tax differs from state to state. Business owners, working individuals, merchants and
people carrying out various occupations comes under the purview of this tax.
10 Importer Exporter Code (IEC)
Importer Exporter Code (IEC) is a unique 10 digit code issued by Director General of Foreign Trade, Ministry
of Commerce, Government of India. To carry on import or export in India, IE Code is mandatory. No person
or entity shall make any Import or Export without IE Code Number. If there is any change in the particulars
of LLP, changes in directors, change of address, an application has to be made to Director General of Foreign
Trade to effect such changes in the IEC Records / Certificate.
For any clarifications and more details on specific compliance, contact:
CompaniesInn Solutions Private Limited
#48, 100Ft Road, Opp to KendriyaSadan, Koramangala, Bangalore – 560034
Phone: +91 80 3025 5900;
E-Mail: info@companiesinn.com
URL: www.companiesinn.com