Limited Liability Partnership (LLP) Compliance Manual

Background

Dear Reader,

We are existing in a rapidly changing business environment. The pace of change has significantly expanded the business risk canvass forcing regulators and legislators to enforce stringent compliance norms. While the intention of regulators is to manage and mitigate business risks and drive business integrity, the stakeholders are often challenged with a task of monitoring, adhering and managing these compliances to sustain business.

India has undergone significant changes in tax and regulatory legislations and stakeholders (Corporates and Non-Corporates) are often under pressure to ensure compliances on time. Not meeting compliance could result in stringent liabilities on the Corporates and on Non-Corporates and lead to severe penalties and reputational risks.

In this insight document, we have taken a reasonable attempt to consolidate significant tax and regulatory compliances and their consequences under the following Laws:

  • The Income-tax Act, 1961
  • The Goods and Services Tax Acts
  • The Limited Liability Partnership Act, 2008

We hope this docket works as a quick reference manual to guide you in managing your statutory compliance initiatives. We do not claim that this is a total compliance management handbook and recommend to use this hand-out as a guidance document only.

Therefore, readers of this publication are advised to seek their own professional advice before taking any course of action or decision, for which they are entirely responsible, based on the contents of this publication.

Regards,

PravasiTax

Income Tax

Compliance Due Date Consequence of non-compliance
Payment of Advance Tax:

Income Tax payable before the end of the financial year, in a progressive manner.

The following are the slabs for payment of advance tax:
  • 15% of the advance tax payable by June 15;
  • 45% of the advance tax payable by Sep 15;
  • 75% of the advance tax payable by Dec 15; and
  • 100% of advance tax payable by Mar 15.
Default in payment:
  • Interest @1% p.m from 1st April of the following financial year till the date the taxes are paid
  • Interest for deferment of advance tax – at 1% per month for short payment / nonpayment of individual instalments of advance tax
Less: Cost of Acquisition (B)
Profits / Gain (i.e., Capital Gains) chargeable to tax (A-B)
Income Tax Return
  • On or before July 31 following financial year end
  • LLP liable to tax audit, October 31
  • For LLPs subject to Transfer Pricing, due date is November 30
  • Rigorous imprisonment
  • Fine:
    • If return is furnished after December 31 of Assessment Year, fine would be Rs.10,000
    • In other cases, fine is Rs.5,000
  • Interest @ 1% per month / part of a month
Payment of self-assessment tax:

Every LLP has to deposit the income tax liability as stated in the return of income

  • To be paid by July 31 of the following financial year.
  • For LLPs subject to Tax audit – due date is October 31
  • For LLPs subject to Transfer Pricing, due date is November 30
Treated as assessee-in-default – Penalty of such amount as Assessing Officer may impose but not exceeding the tax payable.
Submission of Tax Audit Report:

Books of accounts to be audited and report in Form 3CD to be submitted accompanied by tax auditor’s certificate in Form No 3CB

(Applicable to gross receipts from Business exceeds Rs.1 Crore)

One month prior to due date of filing tax return

(On or before September 30 in the year following the financial year end;

For LLPs subject to Transfer Pricing, due date is October 31)

  • Penalty 0.5% of the Turnover / Gross Receipts or Rs. 150,000, whichever is lower.
Payment of TDS:
  • Salary
  • Rent / Interest
  • Payments to Contractors
  • Fee for Technical services / Royalties
  • Commission / Brokerage
  • Payments to Non-residents
  • 07th of next month
  • For the month of March - April 30
  • Disallowance - 30% of expenditure (100% in case of Payments to Non-resident)
  • Default in deduction:
    • Interest @1% p.m
    • Penalty – Amount equal to TDS
  • Default in payment:
    • Interest @1.5% p.m
    • Penalty – Amount equal to TDS
  • Rigorous imprisonment and fine - Min term 3 Months; Max term 7 Years
Submission of Quarterly TDS Returns:
  • On non-resident payments (Form 27Q)
  • On salary payments (Form 24Q)
  • On other payments (Form 26Q)
  • Q1 (Apr to Jun) - 31 July
  • Q2 (Jul to Sep) - 31 Oct
  • Q3 (Oct to Dec) - 31 Jan
  • Q4 (Jan to Mar) - 31 May
  • Late filing fee - Rs 200 per day of default
  • Penalty in a range of Rs 10,000 to Rs 1 lakh
  • Payee will not be able to claim TDS credit
Certificates evidencing taxes deducted from payments other than salary, to be issued to the payees

Form 16A

  • Q1 (Apr to Jun) - 15 Aug
  • Q2 (July to Sep) - 15 Nov
  • Q3 (Oct to Dec) - 15 Feb
  • Q4 (Jan to Mar) - 15 June
  • Penalty – Rs 100 for every day during which failure continues
Certificates evidencing taxes deducted from salary payments, to be issued to employees

Form 16

  • By 15 June of the next Financial Year
  • Penalty – Rs 100 for every day during which failure continues
Payment of TCS
  • 07th of next month
  • For the month of March – 30 April
  • Penalty equal to amount of TCS
Submission of Quarterly TCS Returns

Form 27EQ

  • Q1 (Apr to Jun) - 15 July
  • Q2 (July to Sep) - 15 Oct
  • Q3 (Oct to Dec) - 15 Jan
  • Q4 (Jan to Mar) - 15 May
  • Late filing fee - Rs 200 per day of default
  • Penalty in a range of Rs 10,000 to Rs 100,000
Certificate evidencing collection of TCS
  • Q1 (Apr to Jun) - 31 July
  • Q2 (July to Sep) - 30 Oct
  • Q3 (Oct to Dec) - 30 Jan
  • Q4 (Jan to Mar) - 30 May
  • Penalty – Rs 100 for every day during which failure continues
AMT Certificate:

Every LLP paying tax under AMT is required to furnish Form 29C, certified by a CA

To be obtained before furnishing of Return of Income
Non-resident payments Any person responsible to make payment to a non-resident, shall furnish information in Form 15CA and Form 15CB Penalty of Rs 100,000
Statement of Financial Transactions (SFT): By May 31 following financial year end Overall, penalty of Rs 500 per day from the expiry of original due date till due date mentioned in the notice and Rs 1,000 per day beyond the due date specified in the notice.

Income Tax – Transfer Pricing

Compliance Due Date Consequence of non-compliance
Transfer Pricing Certificate:

LLP, who has entered into international transactions or specified domestic transactions (‘SDT’) with its Associated Enterprise is required to furnish a certificate in Form 3CEB

Transfer Pricing Documentation:

LLP is required to maintain prescribed documentation in respect of international transactions or SDT entered into by it with its associated enterprise during the year.

  • One month prior to due date of filing tax return (On or before 31 Oct of the year following the financial year end)
  • To be prepared before obtaining the Transfer Pricing Certificate
  • Penalty of Rs. 100,000
  • Failure to maintain requisite documents – 2% of the value of the international transaction or SDT
  • Failure to furnish requisite documents during the assessment proceedings – 2% of the value of the international transaction or SDT

GST

Compliance Due Date Consequence of non-compliance
Furnishing details of outward Supplies:

Form GSTR-1

Regular taxpayer having turnover up to Rs 1.5 crore and opted for quarterly filing – 30th of the month following the end of the quarter.

Others - 11th of the subsequent month

  • Late fee:
    • Normal Return: Rs 200 per day of delay subject to maximum Rs 5,000
    • Nil Return: Rs 100 per day of delay
  • Reduction in late fee vide Notification:
    • Normal Return: Rs 50 per day of delay
    • Nil Return: Rs 20 per day of delay
  • Interest on late payment of GST due @ 18% p.a.
  • If GST return is not filed, subsequent returns cannot be filed which results in cascading effect leading to heavy fines and penalties
  • Input tax credit cannot be claimed
Monthly GST return and the payment of GST:

In General -Form 3B

20th of the following month (Monthly)
Quarterly GST Return and payment of GST under Composition Scheme:

Form CMP-08

18th of the month following the Quarter (Quarterly)
Return to be filed annually under Composition Scheme:

GSTR-4

April 30 following financial year end
GST Return and payment of GST by an Input Service Distributor:

Form GSTR-6

20th of the following month (Monthly)
Monthly GST Return and payment of TDS under GST:

Form GSTR-7

10th of the following month (Monthly)
Monthly GST Return and payment of TCS under GST:

Form GSTR-8

10th of the following month (Monthly)
Annual Return:

Regular Taxpayer: Form GSTR-9

Composition LLP: Form GSTR-9A

E-Commerce Operator: Form GSTR-9B

December 31 of the next Financial Year
  • Late fee of Rs 100 per day per Act i.e., Rs 200 per day subject to maximum 0.25% of turnover in the State or Union Territory.
  • Interest will be paid at of 18% per annum. It will be calculated by the LLP on account of outstanding tax to be paid.
GST Audit:

Applicable to regular taxpayer having aggregate turnover > Rs 2 Crores

Form GSTR-9C

December 31 of the next Financial Year
Deposit of GST Normal taxpayer – 20th of the following month.

Composition taxpayer – 18th of the month following the quarter

  • Interest @ 18%
  • Failure to deposit GST beyond 3 months: Penalty of Rs 10,000 or an amount equal to tax evaded, whichever is higher
Maintenance of separate accounts and other documents:

In case of multiple places of business (as per the registration certificate), the accounts shall be maintained at the respective place of business.

Penalty of Rs 10,000 or an amount equal to tax evaded, whichever is higher

Limited Liability Partnership Act, 2008

Compliance Due Date Consequence of non-compliance
Annual Return:

Form 11

30th May following financial year end
  • Penalty: Rs 100 per day of delay
Statements of Accounts and Solvency:

Form 8

30th October following financial year end
DIR-3 KYC:

To be submitted by every designated partner holding DPIN as on 31st Mar of a financial year should submit e-form DIR-3 KYC.

30th June following financial year end On Designated Partner:
  • DPIN will be deactivated
  • Cannot be appointed in any new company or LLP
  • Cannot resign from LLP
  • Cannot mention DPIN in any document in relation to LLP
  • Fee of Rs 5,000 for reactivation of DPIN

On the LLP:

  • Cannot file any form with DSC of such partner

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