Mandatory Annual Compliances for a Limited Liability Partnership (LLP)

Keep your limited liability partnership from being a defaulter by staying compliant as “Prevention is always better than Cure”. You might have to face extreme consequences such as hefty penalties if LLP annual compliance procedure is not followed duly. This blog focuses on all the mandatory compliances that every LLP needs to follow.

The mandatory annual compliances of LLP include the following:

1. File Annual Return with MCA
2. Statements of the accounts or Financial Statements
3. Filing the Income Tax Returns
4. Filing DIR-3 KYC

Annual Return:

The Annual Return filling of  LLP is to be done in the format prescribed by MCA through Form-11. Through this form, Annual Returns of all registered LLPs are submitted. Further, this form provides information regarding the Partners of LLP. You need to inform of any changes in the partners or the management of LLP during the reporting period in the aforesaid form so the Ministry can have the updated information regarding the Partners/ Designated Partners of all registered LLPs. This mandatory LLP compliance form is to be filed on MCA portal within 60 days from the closure of the financial year (31^st March). Hence the due date for filing Form-11 is 30^th day of May.

Things needed to file FORM-11 are:
1. Digital Signatures of Two Designated Partners,
2. LLP Identification number,
3. Business Classification and Business Activities,
4. Details of the LLP and concerned Designated Partners/Partners,
5. In case your LLP has contribution of more than Rs. 50 lacs and/or Turnover of Rs. 5 Crore, your FORM -11 needs to be certified by a Company Secretary (CS).

Not following the rules always lead to consequences. This general principle is applicable to LLPs also. Penalty for not filing the Annual Return before due date is Rs. 100/- for each day till the non-compliance continues.

Statement of Accounts & Insolvency:

Another LLP annual compliance includes Form- 8. You need to submit the Statement of Account & Solvency of LLPs on the MCA Portal. In every business, it is mandatory to maintain books of accounts and financial statements. Every registered LLP needs to furnish their statement of Accounts before the Ministry of Corporate Affairs. The due date for filing is 30^th day of October every year. To declare that while maintaining Accounts proper care is taken by LLPs is the aim behind filing this form.

Things to keep in mind while filing FORM-8:
1. Disclosure of all Micro, Small and Medium Enterprises (MSMEs) to the Ministry.
2. LLPs also need to disclose their contingent liabilities in the form.
3. Audit Report is mandatory in case your Contribution exceeds Rs. 25 Lacs and/or Annual Turnover is more than Rs. 40 Lacs.

The Penalty for not complying with this mandatory norm is Rs. 100/- per day after the Due Date.

Every registered LLP is required to file the abovementioned forms, even if the business activities have not started yet.

These two mandatory LLP compliances are a requirement under the Limited Liabilities Partnership Act, 2008 and its allied rules.

There are two other filings which are necessary for others as well as LLPs; which are ITR and DIR-3 KYC.

Also Read: LLP Account Opening Documents Checklist

Income Tax Return:

Every LLP requires to file the Income Tax Returns after the end of every financial year. Always remember that the ITR of your LLP needs to be filed separately from the Partners’ personal ITRs. You can file Income Tax Returns via online and offline modes. Moreover, you need to file the same on or before the due dates prescribed under the Income Tax Act 1961, which are as follows:

• 31^st July – For all LLPs whose accounts are not subject to Audit under any Law.
• 30^th September – For all the LLP whose accounts are subject to Audit under any Law.

Delay in complying with ITRs lead to a penalty of Rs. 5000/- if you file the same after due date but before 31st December. Moreover, if you file ITR after 31st December of the same assessment year, this penalty increases to Rs. 10,000/-.
Penalty for all LLPs with a turnover up to Rs. 5 Lacs is Rs. 1000/-.

DIR-3 KYC:

Every DIN holder has to file DIR-3 KYC every year even if he is not a director or designated partner in any company or LLP. This form is also a mandatory LLP compliance.

The first time after getting DIN, you need to file E-form DIR-3 KYC. Whereas, all subsequent filings are done by DIR – 3 KYC WEB Form.

Due date for filing is 30th day of September of the immediate next financial year.

The Penalty of not filing this form is not only monetary as it also leads to deactivation of DIN. Further, there is also a pecuniary penalty of Rs. 5000/- after deactivation of Din.

I would like to conclude saying, once you take up the responsibility of building a whole Legal Entity from scratch, you should also take care of it’s needs. We can say that staying compliant with the norms of regulatory Authorities will help you keep your LLP afloat.