LLP, a legal form available world-wide, now introduced in India and is governed by the Limited Liability Partnership Act 2008, with effect from April 1, 2009

1. DNS Advisors
LIMITED LIABILITY
PARTNERSHIP (LLP)

2. Topics Covered
 About LLP
 Salient features of LLP
 Benefits of LLP over Company
 Benefits of LLP over Partnership firm
 Conversion of company into LLP
 Services offered by us
DNS Advisors

3. About LLP:
LLP, a legal form available world-wide, now introduced in
India and is governed by the Limited Liability Partnership Act
2008, with effect from April 1, 2009
Limited Liability Partnership (LLP) is a corporate business
vehicle that provides both the benefits of a company and
partnership firm i.e. limited liability and allows its members
the flexibility of organizing their internal structure as a
partnership based on a mutually arrived agreement.

4. SALIENT FEATURES:
• Body corporate and separate legal entity from its partners
• Liability of partners limited to their contribution
• No requirement of minimum capital contribution
• Perpetual existence irrespective of changes in partners
• Rights and duties of partners shall be governed by an agreement
between partners.
• Minimum two partners require as of whom at least one shall be
resident in India.
• No restrictions as to maximum number of partners
• No requirement of audit if contribution does not exceed Rs 25 Lakhs
or annual turnover does not exceeds Rs 40 Lakhs.
• A firm, private company or an unlisted public company can also be
converted into LLP.
• The Indian Partnership Act, 1932 shall not be applicable to LLPs.
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5. Benefits of LLP over limited company:
 Minimum Alternative Tax (MAT) not applicable
 Corporate Dividend Tax (CDT) not applicable
 Lower cost of formation
 Lesser compliance requirements
 Easy to manage and also easy to wind up and dissolve
 No requirement of minimum capital contributions
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6. Minimum Alternative Tax (MAT) not applicable
Lower Tax Liability
Example 1
Particulars Company LLP
Book Profits 2,00,000 2,00,000
Taxable Profits 50,000 50,000
Tax at normal rates (A) 15,000 15,000
Tax as per MAT (B) 36,000 NIL
Tax Payable (higher of A/B) 36,000 15,000
Residual Profits 1,64,000 1,85,000
Net Gain 21,000
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7. Minimum Alternative Tax (MAT) not applicable
Example 2
Particulars Company LLP
Book Profits 3,20,000 3,20,000
Taxable Profits 80,000 80,000
Tax at normal rates (A) 24,000 24,000
Tax as per MAT (B) 57,600 NIL
Tax Payable (higher of A/B) 57,600 24,000
Residual Profits 2,62,400 2,96,000
Net Gain 33,600
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8. Corporate Dividend Tax (CDT) not applicable
In the case of a company, if the owners to withdraw profits from
company, an additional tax liability in form of CDT @15% (plus
surcharge and Education Cess) is payable. However no such tax is
payable in the case of Limited Liability partnership and profits of the
firm can be freely withdrawn by the partners.
Carrying above example forward:
Particulars Company LLP
Residual Profits 2,62,400 2,96,000
Tax on distribution 44,595 NIL
Distributable Profits 2,17,805 2,96,000
Net Gain 78,195
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9. Lower cost of formation
Features Company LLP
Legal Cost to Incorporate
Rs 8,000 Rs 2,500
having capital of Rs 1 lakh
Legal Cost to Incorporate
Rs. 20,000 Rs. 4,000
having capital of Rs 5 lakh
Lesser compliance requirements
Features Company LLP
Quarterly Board of Directors
meeting, annual
Meetings Not required
shareholding meeting is
mandatory
Required, if the contribution
Compulsory, irrespective of is above Rs.25 Lakhs or if
Audit
share capital and turnover annual turnover is above
Rs. 40 Lakhs
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10. Easy to manage and also easy to wind up and
dissolve
Features Company LLP
Less procedural as
Dissolution Very procedural
compared to company.
No requirement of Minimum Capital
Contributions
Features Company LLP
Minimum Capital Rs 1 lakh (for private Company) No such mandatory
Contributions Rs 5 lakh (for public company) requirement
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11. Benefits of LLP over Partnership firm:
 Partners of LLP not personally liable for the obligations of
entire partnership.
 LLP protects a partner from the liability arising from the
misconduct or personal acts of other partners
 Foreign nationals can be partners in a LLP unlike in partnership
firm
 A separate legal personality distinct from its partners, can own
assets in its name, sue and be sued.
 An LLP is taxed as a partnership, but has the benefits of being a
corporate
 No upper limit on number of partners in an LLP
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12. Conversion of private or unlisted public company into
LLP:
Finance Act 2010: No Capital gain on Conversion
Transfer of capital assets on conversion of a private / an unlisted public
company into a LLP as per the provisions of LLP Act, 2008 shall not be
treated as transfer for the purpose of capital gains tax subject to following
conditions
• The turnover or gross receipts of the company in any 3 years preceding
the year of conversion should not exceed Rs. 60 Lakh
• No amount is paid to any partner out of the accumulated profit on the
date of conversion for a period of three years from the date of
conversion
• All the assets and liabilities of the company should become the assets
and liability of the LLP
• All the shareholders of the company should become partners in the LLP
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13. Services offered by us:
• Formation of LLP
• Conversion of firm into LLP
• Conversion of Private limited/unlisted public company
into LLP
• Reservation of name
• LLP annual filing
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14. Contact us
DNS Advisors Contact Persons
Registered Office: Deepak Gupta
B - 2/259, Yamuna Vihar M +91 98113 00590
New Delhi – 110053 E deepak@dnsadvisors.com
Tel: 011 43658452
Naveen Goyal
Corporate Office: M +91 99110 95297
W-123 Greater Kailash II E naveen@dnsadvisors.com
New Delhi -110048
Disclaimer:
This document is prepared for information purposes only. No reader should act on the basis of any statement
contained herein without seeking professional advice. The firm expressly disclaims all and any liability to any
person who has read this, document or otherwise, in respect of anything, and of consequences of anything
done, or omitted to be done by any such person in reliance upon the contents of this document.
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