Entity guide · FY 2026-27 · India

Limited Liability Partnership (LLP)

Hybrid structure — partnership flexibility with corporate liability shield. Limited Liability Partnership Act, 2008 — incorporated via FiLLiP under LLP Rules, 2009.

Min: 2 partners (2 must be Designated Partners; at least one resident) membersMax: unlimitedLimited liabilitySeparate legal entityDPIIT: Eligible

Headline facts

Incorporation cost

₹8,000–25,000

Typical timeline

10–18 working days

Tax regime (FY 2026-27)

Flat 30% + 12% surcharge (above ₹1 Cr) + 4% cess. Partner profit share exempt under Section 10(2A). Remuneration deductible under Section 40(b).

FDI eligible

Yes with conditions (100% automatic route in sectors allowing 100% automatic FDI for companies without FDI-linked performance conditions)

Typical revenue band

₹50 lakh–₹20 crore

Audit requirement

Statutory audit under LLP Act Section 34(4) if turnover > ₹40L or contribution > ₹25L. Tax audit under Section 44AB triggers independently.

Who LLP is best for

A professional services firm with 2-10 partners seeking liability protection and tax-deductible remuneration.
A bootstrapped software or content business wanting a corporate shell without company weight.
NRI or foreign-partner ventures in 100% automatic-route FDI sectors.
Holding structure for real-estate or portfolio assets.

Who should NOT choose LLP

Founders expecting priced equity rounds from institutional VCs within 24 months.
Businesses planning to issue ESOPs to employees.
Ventures targeting IPO or strategic M&A within 5-7 years.

Pros & Cons

Pros

Personal assets shielded — liability limited to agreed contribution under LLP Act Section 26.
Lower ongoing compliance than Pvt Ltd — two annual MCA forms vs six+.
No dividend distribution concern; profit share tax-exempt in partners' hands.
Perpetual succession — LLP survives change of partners.
Statutory audit only above ₹40L turnover or ₹25L contribution.
DPIIT-eligible; Section 80-IAC and Fund of Funds access available.
FDI under automatic route in most sectors.

Cons

Priced equity rounds structurally difficult — most VCs prefer Pvt Ltd for ESOP and preference share compatibility.
30% tax rate higher than the 22% available to companies under Section 115BAA.
Conversion to Pvt Ltd later is possible but not tax-neutral by default.
Form 8 and Form 11 attract ₹100/day late fee per form with no cap under 2022 amendment.
Every Designated Partner must maintain DPIN and file DIR-3 KYC annually.
Some sectors (banking, insurance, NBFC) remain closed to LLPs.

Annual compliance

Filing forms: Form 11 (Annual Return) by 30 May, Form 8 (Statement of Account & Solvency) by 30 Oct, ITR-5, DIR-3 KYC by 30 Sep for each Designated Partner.

Form 11 by 30 May, Form 8 by 30 Oct, DIR-3 KYC by 30 Sep per Designated Partner, ITR-5 by 31 Oct (audited) or 31 July, plus GST and TDS. Statutory audit only if turnover > ₹40L or contribution > ₹25L. LLP agreement changes require Form 3/4 within 30 days. Late fees uncapped at ₹100/day per form.

Generate your FY 2026-27 compliance calendar for LLP

Conversion pathways

Pvt Ltd (Section 366 Companies Act read with Companies (Authorised to Register) Rules 2014 — not tax-neutral unless structured as slump sale or Section 230-232 scheme)

Our team's take

The specific failure we see is founders assuming the LLP is 'a partnership with limited liability and less compliance' and running it with partnership-firm discipline — nearly none. LLPs have statutory filings with real penalty exposure at ₹100/day per form with no cap. We routinely onboard LLPs carrying multi-lakh penalty liabilities for two or three years of non-filing. The fix is trivial if instituted early: a compliance calendar tied to the Designated Partners' personal diaries, not the accountant's.

— CA Siddharth A Shah & Associates · FRN 157167W

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Disclaimer

This tool provides general informational guidance on Indian business entity structures for FY 2026-27 and does not constitute professional advice, an engagement with CA Siddharth A Shah & Associates, or a substitute for personalised consultation with a qualified Chartered Accountant. Recommendations are based on the inputs you provide and may not address your complete legal, tax, or regulatory position.