Partnership to LLP conversion

This query is : Resolved

Rajeesh Kumar (Querist)
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18 October 2023 Hi Experts,
Need your views on the following Case :
Facts : One of Our client is a Partnership Firm engaged into the business of Real Estate Development. They have started Construction and in the mid of the project. Now they wish to Convert Partnership Firm into Limited Liability Partnership with the same Partners becoming Designated Partners/Partner in the LLP.

Issue :
1. Will this Conversion be treated as Transfer of Business ?
2. What precautions need to be taken during and after Conversion with respect to the direct/indirect tax and accounting treatment ?

Thank you in Advance for your valuable views

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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19 October 2023 1 No, it will not be transfer of business, capital gains tax not applicable.
2 An existing partnership firm can be converted into LLP by complying with the Provisions of clause 58 and Schedule II of the LLP Act. Form 17 needs to be filed along with Form 2 for such conversion and incorporation of LLP. ITC can be carried over to LLP.
Income tax loss can be carried forward.
New PAN and GST registration required.

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