A Limited Liability Partnership (LLP) is taxed at a flat rate of 30%, plus a 12% surcharge where total income exceeds Rs.1 crore, and a 4% health and education cess. Partner remuneration and interest are deductible within Section 40(b) limits, and Alternate Minimum Tax under Section 115JC applies at 18.5%.
The tax rate
An LLP does not get slab benefits or the concessional company regimes — it is taxed at a flat 30%. A surcharge of 12% applies where total income exceeds Rs.1 crore, and a 4% cess applies on tax plus surcharge. There is no dividend distribution tax; partners' profit share is exempt in their hands under Section 10(2A).
Deduction of partner remuneration and interest
Remuneration to working partners and interest on partners' capital are deductible in computing the LLP's income, but only within the limits of Section 40(b) and if authorised by the LLP agreement:
| Item | Section 40(b) limit |
|---|---|
| Interest on capital | Up to 12% per annum |
| Remuneration — first Rs.3 lakh of book profit (or loss) | Rs.1,50,000 or 90% of book profit, whichever is higher |
| Remuneration — balance of book profit | 60% of book profit |
the current Section 40(b) remuneration slabs, which were revised by the Finance Act 2024.
AMT and other points
- AMT under Section 115JC at 18.5% (plus surcharge/cess) of adjusted total income applies where it exceeds the normal tax, with AMT credit carried forward.
- An LLP cannot opt for presumptive taxation under Section 44AD.
- A tax audit applies on the same turnover thresholds.
- Losses carry forward subject to continuity of partners (Section 78).
Filing requirements
An LLP files ITR-5, and the audit report (if applicable) in Form 3CA/3CB-3CD. The income-tax return is due by 31 July (non-audit) or 31 October (audit). Separately, every LLP files Form 11 (annual return) and Form 8 (statement of account and solvency) with the MCA.
Key takeaways
- LLP tax: flat 30% + 12% surcharge above Rs.1 cr + 4% cess.
- Partner remuneration/interest deductible within Section 40(b).
- AMT at 18.5% under Section 115JC may apply.
- Files ITR-5; also MCA Forms 11 and 8.