Take over of proprietorship firm by LLP

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Anil Gupta

Anil Gupta (Querist)
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30 September 2021 What are the tax implications from Income Tax Point of view

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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30 September 2021 No tax implications

The 1st Step is to incorporate a new LLP by filing e-form FiLLiP for reserving the name and incorporating the LLP.

Attachments/Documents required to be filed.

a. Latest passport size Photographs of all partners;

b. Proof of identity of each partner – Aadhar Card/Passport/Driving License/Voter ID;

c. Proof of residence of each partner – Bank Statement/Passbook/electricity bill/ telephone bill/any utility bill;

d. PAN card of all Partners;

e. Proof of Proposed registered office – Electricity Bill along with Rent Agreement OR ownership proof of proposed registered office;

f. Subscribers sheet including consent of each partner;

g. Interest of partners in other entities;

h. Copy of BR (in case Body Corporate is Partner) (also it shall mention the name and address of an individual nominated to act as nominee/designated partner on its behalf).

> STEP-2 Filing of LLP Agreement:

After Incorporation of LLP, the partners of the LLP must enter into LLP Agreement (which must include an enabling clause of conversion from sole proprietorship to LLP)

After entering into agreement it shall file the same with the ROC within 30 days of incorporation in e-form 3.

What Document require? Stamp paper for LLP Agreement of State where LLP is to be incorporated.

> Note –

a. An LLP agreement must include the clause regarding the acquisition of sole proprietorship;

b. All the assets and liabilities of the proprietor immediately after the conversion become the assets and liabilities of the LLP;

c. All movable and immovable properties of the proprietor automatically vests in the LLP. Thus No Capital Gains tax shall be charged on transfer of property from Proprietorship firm to LLP.

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