The Limited Liability Partnership Act, 2008 has come into effect in 2009. LLP Rules and forms have been notified w.e.f. 1st April, 2009, The Finance No.2 Act, 2009 has incorporated the taxation scheme of LLPs in the Income Tax Act. It is same patters as in partnership firms i.e. taxation in the hand of the firm and exemption in the hands of its partners. In previous article I have written about basic concept of LLP like incorporation of LLP in India, basic concept of LLP. In this article we will discuss about the tax implication of LLP (Limited Liability Partnership) in details.
See: Know the Process of forming LLP
Every Partner of the LLP shall be jointly and severally liable for the payment of any tax due from an LLP which cannot be recovered, unless the partner proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or beach of duty on his part in relation to the affairs of the LLP. Some of the condition for tax implication onf LLP.
- The tax will be charged on the LLP not in the hands of the partners like partnership firms.
- The conversion from partnership firm to LLP will not effect any tax except (a) partner does not change any rights and obligations (b) there is no transfer of any asset or liability.
- If there is breach of any above conditions section 45 shall apply.
Who will sign on income tax return of LLP (Limited Liability Partnership ) ?
Designated partners have been greater responsibility in the LLP. So the designated partner will sign on the income tax return of LLP. In case if designated partner is not available then any partner shall sign the income tax return of Limited Liability Partnership (LLP).
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{ 1 comment… read it below or add one }
HI,
Nice article!
Is there any other difference like the rate of TAX that a partnership firm pay or an LLP pays.
is it 30% on the profit? Please advise
Thanks
Pradeep