How to Set-up LLP in India?

 

India is a vibrating place for doing business. After economic liberalization, the Government of India has made business-friendly policies to boost Indian business and to fascinate foreign entrepreneurs. Today, India’s improved business infrastructure, better economic status, political stability, and improved ranking in ease of doing business have opened up new avenues of opportunities for many foreign enterprises to enter India. Foreign Direct Investment (FDI) in LLP is proving an effective and constructive business model for international organizations to enter India. Foreign Entrepreneurs (except Bangladesh and Pakistan) can invest in an LLP in the form of capital contribution or by way of acquisition of profit shares. An investor can become a partner in LLP either by contributing to its capital or by acquiring a partnership share from an existing partner.     

The Advantages of Establishing LLP in India:

·         Establishing an LLP is simpler to incorporate as compared to the company. The minimum amount of fees for incorporating an LLP is INR 500 (US$7) and the maximum amount is INR 5600 (US$82).

·         Account audit is not mandatory in the case of LLP unless annual turnover exceeds 40 lakhs or contribution of LLP exceeds INR 25 lakhs (US$36,244).

·         There is no minimum capital requirement for LLP registration in India. 

·         LLP enjoys substantial tax waivers. Unlike companies, LLPs are not subject to Dividend Distribution Tax (DDT) or Minimum Alternate Tax (MAT).

·         Unlike Company, there are no restrictions on the partners, if they wish to enter into any legal contracts outside India.

Steps to Establish LLP in India:

·         Digital Signature Certificate (DSC) for at least two proposed designated partners of the LLP.

·         Director Identification Number (DIN) of proposed partners.

·         Apply for the availability of the name using Reserve Unique Name LLP (RUN LLP), a web service used to reserve a name for a new company or to change its existing name. Make sure that name of the company is according to the guidelines of the Ministry of Corporate Affairs (MCA's).

·         Upon approval of name, file form FiLLiP –for incorporation document of the LLP. FiLLiP is an integrated form that offers multiple services for the allotment of DIN, reservation of name, and incorporation of LLPs.

·         LLP agreement is one of the most significant documents. In this document, various important aspects are covered under the agreement that includes the amount and manner of contribution, rights, and duties of partners, description of the business of proposed LLP, among others. The LLP agreement must be filed within 30 days of incorporation of LLP. 

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