Taxation of LLP (Limited Liability Partnership) – In Detailed


Taxation Of LLP.jpg

Tax of LLP– A Total Guide.

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Finance Act, 2009 supplied for the same.

LLP– Tax:

1) LLP s are dealt with as Collaboration Firms for the function of Earnings Tax.

2) According to the arrangements stated in law firms consist of partnership and LLP.And partners consist of partners as said by collaboration act and LLP act.

3) Earnings tax rate:

1. 30% flat tax rate 3% education cess

2. No Minimum Alternate Tax & Dividend Circulation Tax

4) If the earnings of the collaboration company is more than Rs. 1 Crore in any financial year, Additional charge @ 10% would likewise be payable.

5) Deduction in respect of interest on loan & capital to partners is permitted up to 12% simple interest per year.

6) Reimbursement to partners:

The word reimbursement includes Wage, reward commission, royalty. This is enabled as deduction if it is paid to working partner just. Optimum deduction allowed is:

Book Revenue Reimbursement as a % of Book Profit
On very first 300000 150000 or 90% of book earnings which ever is greater
On the balance 60% of Book Revenue

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7) The interest, remuneration will be chargeable as in the hands of the partner under the head income from company or profession.

8) Like Normal collaboration firm The share of the partners in the overall earnings of the firm is exempt in the hands of the partners as the same has actually already been taxed in the hands of the partnership firm.

9) As the revenue of the company is taxable in the hands of firm just, losses are also can be carried forward to subsequent years just in the hands of the LLP.

10) LLP are not qualified to declare the advantages of presumptive taxation Under Area 44 ADVERTISEMENT.

11) In case of an LLP, return of income can be signed by the designated partner thereof, or if due to any unavoidable
reason such designated partner is not able to sign and validate the return, or where there is no designated partner then any partner can sign it.

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