How is llp taxed?

2727 views 4 replies

SosMe

Founder

65 Points Posted on 31 January 2012

Im new to LLP concept & currently doing freelance business (website developement).Recently was told that I could start an LLP due to increasing revenues.But I have the following doubts.It may be very basic, but am looking for clarification from CA`s like you so I can be doubly sure about the process.

1) LLP requires 2 people to setup.Does that mean that I & the partner will draw salary from LLP every month?

2) Is there a limit of the salary to be fixed?

3) Should i pay the 30% tax on LLP on the entire revenues earned in that year OR for the amount remaining in the account after salary+expenses?

Replies (4)

Kiran Toshniwal

Practicing Company Secretary

142 Points Posted on 01 February 2012

Hi,

I hope that this finds you well

1. Partners may or may not withdraw the salary. Its not binding.

2. As per Income tax Act and LLP Agreement

3. 30% to be paid on the profit available after expenses and salary.

Note: From taxation point of view, LLP is treated as Partnership firm

For any further clarification, please revert.

Regards,

Kiran T

https://startcompanyinindia.com/

nishtha gupta

student-ipcc cs final

35 Points Posted on 02 February 2012

thanks alot dear...i was not knowing even the ABCD of LLP..now i come to no sumthing..

Tanash Chakraborty

KPMG

292 Points Posted on 02 February 2012

hey can i know about the concept of mat in llp???

and the amt of mat credit available??

Kiran Toshniwal

Practicing Company Secretary

142 Points Posted on 02 February 2012

From the A.Y.2012-13, MAT is applicable on Limited Liability Partnership Firm.

Steps for Calculating Tax liability of LLP

Calculate regular income tax of LLP

Calculate Adjusted Profits

Particulars		Amount (Rs.)
Total Income of LLP		xxx
Add Back
(i) Deduction claimed U/s 80 H to 80 RRB		xxx
(ii) Deduction claimed U/s 10AA		xxx
Adjusted Profits		xxx

Calculate MAT on Adjusted total Income @ 19.055% (18.5% + Ed.Cess @ 2% + SHE Cess @ 1%)

If the Tax as per MAT is less than regular tax then the Tax payable by LLP will be regular Tax and if the Tax as per MAT is greater than regular tax then the Tax payable by LLP will be the amount of tax as per MAT.