Limited Liability Partnership (LLP)
Limited Liability Partnership (LLP)
Company formation in India
The LLP is best suited for: Professional services firms (consultants, chartered accountants, architects), Small businesses that want limited liability without the compliance burden of a Pvt Ltd, Businesses with turnover below INR 40 lakh (no audit requirement), Joint ventures between Indian and foreign partners. LLPs are taxed as a separate entity at a flat 30% on total income (plus 4% health and education cess, effective rate 31.2%). The concessional tax regime under Section 115BAA is not available to LLPs. However, profit distributions from the LLP to its partners are exempt from tax in the hands of the partners (no DDT equivalent). LLPs with turnover up to INR 40 lakh are exempt from the statutory audit requirement. MAT does not apply to LLPs. LLPs that opt for the presumptive taxation scheme (Section 44AD) can declare 8% of turnover as income if gross receipts do not exceed INR 2 crore.
- Professional services firms (consultants, chartered accountants, architects)
- Small businesses that want limited liability without the compliance burden of a Pvt Ltd
- Businesses with turnover below INR 40 lakh (no audit requirement)
- Joint ventures between Indian and foreign partners
Key Facts
Step-by-Step Formation Process
Obtain DSC and DPIN
All designated partners must obtain a Digital Signature Certificate and a Designated Partner Identification Number (DPIN) via the MCA21 portal. At least two designated partners are required, and at least one must be an Indian resident.
Reserve the LLP name via RUN-LLP
Apply for name reservation through the RUN-LLP service on MCA21. The name must end with "LLP" or "Limited Liability Partnership" and cannot be identical to existing entities.
File FiLLiP (Form for incorporation of LLP)
Submit the FiLLiP form via MCA21 with the LLP agreement, partner details, proof of registered office address, and consent of designated partners. The LLP agreement defines the rights, duties, and profit-sharing ratio among partners.
Post-incorporation compliance
File the LLP agreement with the Registrar within 30 days of incorporation. Apply for PAN, TAN, and GST registration as applicable. File annual Statement of Accounts and Solvency (Form 8) and Annual Return (Form 11) with the Registrar. Income tax return must be filed annually.
Required Documents
- PAN and Aadhaar of Indian designated partners (or passport and apostilled documents for foreign partners)
- Digital Signature Certificates for all designated partners
- Proof of registered office address with NOC from property owner
- LLP agreement (must be filed within 30 days of incorporation)
- Subscriber sheet
- Consent of designated partners
Cost Overview
Tax Treatment
LLPs are taxed as a separate entity at a flat 30% on total income (plus 4% health and education cess, effective rate 31.2%). The concessional tax regime under Section 115BAA is not available to LLPs. However, profit distributions from the LLP to its partners are exempt from tax in the hands of the partners (no DDT equivalent). LLPs with turnover up to INR 40 lakh are exempt from the statutory audit requirement. MAT does not apply to LLPs. LLPs that opt for the presumptive taxation scheme (Section 44AD) can declare 8% of turnover as income if gross receipts do not exceed INR 2 crore.
Pros & Cons
- Lower compliance burden than a Pvt Ltd — no requirement for board meetings, AGM, or statutory audit (unless turnover exceeds INR 40 lakh or capital contribution exceeds INR 25 lakh)
- No minimum capital contribution requirement — partners decide the contribution in the LLP agreement
- Tax-efficient: LLP profits distributed to partners are not subject to additional tax (unlike dividends from a Pvt Ltd)
- Flexible internal management governed by the LLP agreement
- Lower annual filing costs compared to a Pvt Ltd
- No restriction on the maximum number of partners
- Cannot raise equity from venture capital or private equity investors — LLPs cannot issue shares
- Not eligible for Startup India tax holiday benefits under Section 80-IAC
- Conversion from LLP to Pvt Ltd requires a formal application and is time-consuming
- Foreign investment in LLPs is permitted only under the automatic route and in sectors where 100% FDI is allowed — more restrictive than Pvt Ltd for foreign investors
- At least one designated partner must be an Indian resident (stayed in India for 182+ days in the preceding year)
- Less internationally recognised than the Pvt Ltd structure
Other Structures in India
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Get StartedThis content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.