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A Limited Liability Partnership (LLP) is a type of business entity where partners have limited liability, meaning they are not personally responsible for the debts or obligations of the business beyond their capital contribution.
It is a separate legal entity from its partners — it can own assets, incur liabilities, enter contracts, and sue or be sued in its own name.
This form of business structure is ideal for professionals such as chartered accountants, lawyers, architects, consultants, and small business owners who want a secure yet flexible structure.
Governing Law: Limited Liability Partnership Act, 2008
Regulatory Authority: Ministry of Corporate Affairs (MCA)
Registration Portal: www.mca.gov.in
Incorporation Form: FiLLiP (Form for Incorporation of LLP)
The LLP Amendment Act, 2021 and MCA’s recent 2024–2025 updates have simplified the registration and compliance process, making LLPs more attractive to businesses.
Definition (As per Section 2(n) of LLP Act, 2008)
The limited liability partnership refers to a partnership established and registered by this Act and a body corporate established and registered by this Act and a legal entity that is not partners.
| Feature | Description |
|---|---|
| Separate Legal Entity | The LLP is distinct from its partners and continues to exist even if partners change. |
| Limited Liability | Partners’ liability is limited to the extent of their capital contribution. |
| Perpetual Succession | The LLP continues to exist irrespective of death, insolvency, or retirement of partners. |
| Minimum Partners | Minimum 2 partners are required to start an LLP. |
| Maximum Partners | No limit on the maximum number of partners. |
| Minimum Capital Requirement | No minimum capital prescribed; even ₹1 can start an LLP. |
| Management Structure | Partners manage the business directly; less rigid than companies. |
| Taxation | LLPs are taxed like partnership firms; no dividend distribution tax (DDT). |
| Compliance Requirement | Lower than private or public limited companies. |
Cannot issue shares or raise equity capital from the public.
Limited access to external funding compared to private limited companies.
Non-compliance attracts heavy penalties under the LLP Act.
Cannot easily convert into a Private Limited Company if scaling rapidly.
| Requirement | Details |
|---|---|
| Minimum Partners | 2 (at least one must be a resident of India) |
| Designated Partners | Minimum 2 (must hold Designated Partner Identification Number – DPIN) |
| Maximum Partners | No limit |
| Digital Signature Certificate (DSC) | Required for all designated partners |
| Capital Requirement | No minimum capital required |
| Registered Office | Must have a registered address in India |
| Documents Required | PAN Card, Aadhar Card, address proof of partners, proof of registered office, utility bill, NOC from property owner |
After registration, LLPs must follow certain mandatory compliances:
| Compliance | Form / Return | Due Date |
|---|---|---|
| Annual Return | Form 11 | Within 60 days of financial year end (i.e., by 30th May) |
| Statement of Account & Solvency | Form 8 | By 30th October each year |
| Income Tax Return | ITR-5 | By 31st July (if audit not required) / 31st October (if audit required) |
| Change in Partners | Form 4 | Within 30 days of change |
| LLP Agreement | Form 3 | Within 30 days of incorporation |
Non-compliance attracts a penalty of ₹100 per day per form with no upper limit.
| Particulars | LLP Tax Treatment |
|---|---|
| Income Tax Rate | 30% on total income |
| Surcharge | 12% (if income exceeds ₹1 crore) |
| Health & Education Cess | 4% on income tax + surcharge |
| Alternate Minimum Tax (AMT) | 18.5% (if applicable) |
| Dividend Distribution Tax (DDT) | Not applicable |
| Tax Audit | Mandatory if turnover exceeds ₹1 crore or capital contribution > ₹25 lakh |
| Criteria | LLP | Private Limited Company |
|---|---|---|
| Governing Law | LLP Act, 2008 | Companies Act, 2013 |
| Legal Status | Separate Legal Entity | Separate Legal Entity |
| Minimum Members | 2 Partners | 2 Shareholders |
| Maximum Members | Unlimited | 200 |
| Liability | Limited | Limited |
| Audit Requirement | Only if turnover > ₹40 lakh or contribution > ₹25 lakh | Mandatory |
| Tax Rate (2025) | 30% | 22% (for domestic companies) |
| Compliance Level | Low | High |
| Funding Options | Limited | Easier (equity & venture funding) |
| Ideal For | Professionals & SMEs | Startups & Growth Businesses |
Simplified digital registration via MCA portal
Integration of PAN, TAN, and bank account during registration
100% FDI under automatic route in many sectors
Ideal for freelancers, consultants, and service providers
Cost-effective structure for professional firms
ABC Legal Associates LLP was formed by two lawyers to provide legal consultancy services.
Both partners invested ₹50,000 each. The LLP enters contracts in its own name, and if the firm incurs debts, partners are only liable up to ₹50,000 each — their personal assets are protected.
Yes. Every LLP must be registered with the Ministry of Corporate Affairs (MCA) under the LLP Act, 2008.
Yes. There is no minimum capital requirement to start an LLP.
Only if turnover exceeds ₹40 lakh or capital contribution exceeds ₹25 lakh.
Yes, foreign nationals and NRIs can become partners, subject to FDI rules.
Yes, conversion is possible under specific conditions and approval from ROC.
It typically ranges between ₹5,000–₹10,000 per year, depending on filings.
Yes. LLP continues even after the death or retirement of partners.
Yes. The entire registration process is online through the MCA portal using FiLLiP and RUN-LLP forms.
