Limited Liability Partnership (LLP)

Two architects want to start a practice together. A pair of chartered accountants are leaving a Big 4 firm. A family wants to formalise the trading business they've run as a partnership for twenty years. Very often, the structure that fits all three is the same: a Limited Liability Partnership.

LLPs have been around in India since 2009, and they've become a favourite for professional firms, consultancies and small businesses that want legal protection without the heavier rulebook of a private limited company. This guide covers what an LLP is, how to register one, what you'll need to file every year, and when an LLP is not the right choice.

What is an LLP?

A Limited Liability Partnership is a business structure created under the Limited Liability Partnership Act, 2008. It sits somewhere between a traditional partnership firm and a company.

Like a partnership, it's run by partners who agree among themselves how profits are shared and decisions are made. Like a company, it is a separate legal entity. It can own property, sign contracts, sue and be sued in its own name. And it carries on even if partners change.

The headline benefit is in the name. A partner's liability is limited to the contribution they agreed to bring in. If the LLP runs into debt, creditors can't come after a partner's house or personal savings, unless that partner acted fraudulently. One partner also isn't personally liable for another partner's independent or unauthorised actions, which is a big deal for professional firms.

Key features at a glance

Who can become a partner?

Any individual or body corporate can be a partner in an LLP. That includes companies, other LLPs and foreign entities, subject to FDI rules.

Designated partners are a little different. They're the partners responsible for the LLP's legal compliance: filings, records, and answering to the ROC. Every LLP needs at least two of them, both must be individuals (a body corporate can nominate an individual to act), and at least one must be resident in India.

Since the LLP (Amendment) Act, 2021, "resident in India" means someone who has stayed in India for 120 days or more during the financial year. It used to be 182 days. That change made it noticeably easier for founders who travel a lot, and for NRIs, to set up LLPs here.

LLP registration process in 2026

The whole process runs online on the MCA V3 portal. Here's how it works.

Step 1: Get Class 3 DSCs

Every proposed designated partner needs a Class 3 Digital Signature Certificate from a licensed Certifying Authority. Without one, nothing else can be signed.

Step 2: Reserve the name with RUN-LLP

You can reserve a name through the RUN-LLP service before incorporation. You can propose up to two names in one application. The government fee is ₹200, and an approved name is held for a limited window (commonly three months), so don't sit on it.

You can also skip RUN-LLP and propose the name directly in the incorporation form. That's faster when you're confident the name is clear. If it isn't, a rejection sends you back to the start.

A note on names: the Central Registration Centre has become stricter about names that sound or look similar to existing ones. Swapping a letter or adding a vowel usually isn't enough to get through.

Step 3: File FiLLiP

FiLLiP (Form for Incorporation of Limited Liability Partnership) is the main incorporation form. It captures:

• Proposed name and registered office address

• Business activity

• Details of partners and designated partners

• Contribution of each partner

• Consent of designated partners

FiLLiP also allots a DPIN (designated partner identification number) to up to five individuals who don't already have one, and applies for the LLP's PAN and TAN in the same filing.

Once the ROC approves it, you receive the Certificate of Incorporation with your LLPIN.

Step 4: File the LLP agreement in Form 3

The LLP agreement is the rulebook between partners. It covers profit sharing, contributions, decision-making, admission and exit of partners, and dispute resolution. It must be stamped as per your state's stamp duty rules and filed in Form 3 within 30 days of incorporation.

Don't treat the agreement as a formality. Most LLP disputes we see trace back to a vague clause about exits or profit sharing written in a hurry.

How long does it take?

If documents are in order and the name is clean, an LLP can usually be incorporated in around one to two weeks. Name objections and document mismatches are what stretch it out.

Documents needed for LLP registration

For each partner:

• PAN card (for Indian nationals)

• Aadhaar, passport, voter ID or driving licence as identity proof

• Recent bank statement, utility bill or similar as address proof

• Passport-size photograph

• For foreign nationals: passport plus apostilled or notarised address proof

For the registered office:

• Rent agreement or ownership document

• Recent utility bill (not older than two months)

• No-objection certificate from the property owner

Annual compliance for LLPs

Registration is the easy part. Staying compliant is what keeps an LLP healthy. These are the core filings for every LLP registered in India.

Form 11 and Form 8 each carry an additional fee of ₹100 per day if filed late, with no cap. Those two numbers alone are reason enough to put both dates in your calendar.

On DIR-3 KYC, the MCA revised the cycle in 2026 so that individuals with a DIN don't have to repeat KYC every single year. Check the current rule for each designated partner on the MCA portal, because a deactivated DIN blocks them from signing any LLP form until it's restored.

Event-based compliance

Some filings only come up when something changes:

• Form 3: any change to the LLP agreement, within 30 days

• Form 4: appointment, resignation or change in partners or designated partners, within 30 days

• Form 15: change in registered office

• Form 4D: return on declarations of beneficial interest in contribution

• LLP BEN-2: return on significant beneficial owners

The beneficial ownership rules introduced in late 2023 are worth a separate read if any of your partners are companies, trusts or nominees.

How is an LLP taxed?

For income tax, an LLP is treated much like a partnership firm.

• The LLP pays tax at a flat 30% on its taxable income. A 12% surcharge applies if income exceeds ₹1 crore, plus 4% health and education cess.

• There's no basic exemption. Tax starts from the first rupee of taxable income.

• Profit share is tax-free in partners' hands. Once the LLP has paid tax, partners don't pay again on their share of profit. That's a real advantage over a company, where shareholders pay tax on dividends.

• Remuneration and interest paid to partners are deductible for the LLP within limits, and taxable for the partners.

• From 1 April 2025, the LLP must deduct 10% TDS on remuneration, interest, commission or bonus paid to a partner once that partner's total for the year crosses ₹20,000.

• Alternate Minimum Tax can apply if the LLP claims certain deductions.

One thing to know for planning: the Income Tax Act, 2025 took effect from 1 April 2026. Returns for FY 2025-26 are still filed under the old 1961 Act, but income from FY 2026-27 onwards falls under the new law. The rate structure for LLPs has stayed the same, though section numbers have changed.

LLP vs private limited company: which one?

Our honest take: an LLP is excellent for professional firms, family businesses, consultancies and services businesses that plan to grow on their own revenue. If you expect to raise venture capital or issue ESOPs, start as a private limited company. Converting later is possible, but it's extra work you can avoid.

Start your LLP with CorpE

CorpE handles LLP registration end to end: DSCs, name approval, FiLLiP, a properly drafted LLP agreement and Form 3. After incorporation, we can keep your Form 11, Form 8 and ITR-5 on schedule so the ₹100 per day late fees never start.

Register your LLP with CorpE today.

This article is general information and isn't legal or tax advice. Rules, fees and due dates can change, so confirm current requirements on the MCA and Income Tax portals or with your CA or CS.