Transfer Contribution amount in LLP

This query is : Resolved

Milan Biswas (Querist)
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01 February 2023 Respected Sir,
I want to know that can transfer LLP contribution from D.Director to others, if yes than please tell the legal processes (MCA & IT) of the above.

Thanks

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2025 Hey! Regarding **transfer of LLP contribution** (i.e., the capital or profit share) from one designated partner (DP) or partner to another, here’s what you need to know:

### Can LLP Contribution be Transferred?

* **Yes, LLP contributions can be transferred**, either partly or fully, to another partner or even a new person.
* However, this transfer must be in accordance with the LLP Agreement.
* The LLP Agreement typically outlines the procedure for transfer of capital/contribution and admission or retirement of partners.

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### Legal Process for Transfer of LLP Contribution (MCA Compliance):

1. **Check LLP Agreement**: Review terms about transfer — usually requires consent of other partners or specific procedures.

2. **Consent of Partners**: Obtain consent of all or majority partners as per LLP Agreement.

3. **Execute a Transfer Deed/Agreement**: Document the transfer of capital/contribution clearly mentioning the amount and new partner details.

4. **File necessary forms with MCA:**

* **Form LLP-3 (Change in Partners/Designated Partners and their details)**
To notify MCA about changes in partners or designated partners.

* **Form LLP-4 (Statement of Account & Solvency)**
If there is any change in the contribution or capital structure.

5. **Update LLP Agreement** (if required): Reflect the change in capital/contribution and partners.

6. **File Annual Return (Form LLP-11) and Statement of Account (Form LLP-8)** with updated details.

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### Income Tax Implications:

* Transfer of contribution from one partner to another may have tax implications such as capital gains tax in the hands of the transferor.
* The LLP itself is not taxed on transfer of contribution, but the partners must evaluate their tax liabilities.
* If the transfer involves any sale consideration, it will be treated as a capital gain transaction for the transferor.

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### Summary:

| Step | Action |
| ---- | ------------------------------------ |
| 1 | Review LLP agreement |
| 2 | Obtain partner consent |
| 3 | Draft and sign transfer deed |
| 4 | File LLP-3 & LLP-4 with MCA |
| 5 | Update LLP Agreement (if applicable) |
| 6 | File LLP-11 & LLP-8 annually |
| 7 | Check & comply with tax provisions |

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If you want, I can help draft the transfer deed or guide you step-by-step for MCA filings! Just let me know.

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