Conversion of pvt. co to llp

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 December 2012 If I m doing conversion of pvt. ltd. co. to LLP according to the provions of 47(Xiiib)of income tax act then where will the accumulated reserve of the co. will go as clause 47(xiiib) of I.T. act says that
"no amount is paid, either directly or indirectly, to any partner out of the balance of accumulated reserve standing in the accounts of the company on the date of conversion for the period of three years from the date of conversion"

Pls help me...!!!

Querist : Anonymous

Querist : Anonymous (Querist)

05 December 2012 is ther any other provision for conversion of private co. into llp apart from section 56 & 57????
also what is the stamp duty for registration for such conversion if the paid up capital is Rs. 220000??
and whether the director need to take new dpin or the previous din will do???

Pls rply me asap...!!!!

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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20 July 2024 Converting a private limited company to a Limited Liability Partnership (LLP) involves several considerations under Indian law, including tax implications, stamp duty, and regulatory requirements. Let's address your queries step by step:

### Conversion of Private Limited Company to LLP:

1. **Accumulated Reserves:**
- As per Section 47(Xiiib) of the Income Tax Act, 1961, if a private limited company converts to LLP, no amount can be paid directly or indirectly to any partner out of the balance of accumulated reserves standing in the company's accounts on the date of conversion for a period of three years from the date of conversion.
- Essentially, the accumulated reserves will be retained within the LLP and cannot be distributed to partners for three years following conversion.

2. **Provisions for Conversion:**
- Apart from Section 47(Xiiib), conversions are also governed by Sections 56 and 57 of the LLP Act, which outline the procedures and requirements for converting a private company into an LLP.

3. **Stamp Duty for Conversion:**
- Stamp duty for conversion of a private company to an LLP varies by state in India. It depends on the state in which the registered office of the LLP will be located. Each state has its own schedule of stamp duty rates. You will need to check the specific rates applicable in the state where the registered office of the LLP will be situated.
- Typically, stamp duty is calculated based on the value of the assets of the company being converted or the authorized capital of the LLP, whichever is higher.

4. **Director Identification Number (DIN) and Designated Partner Identification Number (DPIN):**
- The directors of the private company who will become designated partners in the LLP can use their existing DINs for the conversion. They do not need to obtain new DPINs.

### Procedure for Conversion:

- **File LLP Agreement and Form 17:** Prepare and file LLP agreement and Form 17 with the Registrar of Companies (ROC).
- **Approval and Certificate:** Obtain approval and the certificate of registration from the ROC.
- **Intimation to Tax Authorities:** Inform the Income Tax authorities about the conversion and comply with tax filing requirements.

### Legal and Professional Assistance:

Given the complexities involved, especially regarding tax implications and stamp duty, it is advisable to consult with a professional such as a company secretary or a chartered accountant who specializes in LLP conversions. They can provide specific guidance tailored to your circumstances and ensure compliance with all legal and regulatory requirements.

This guidance is based on general principles and may vary based on specific details of your case and changes in applicable laws. Therefore, professional advice is crucial for your specific situation.

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