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Fri. Feb 22nd, 2019
LLP Company

Basics of Filing Taxes and LLPs

Filing tax returns is an annual activity. It is the act by a citizen of India to declare his income and personal circumstances to the authorities. It is done by filling up a form. This is used by the tax authorities to assess the amount of tax the citizen is liable to pay. It is important to file your tax return as it acts a proof that the tax has been paid. It also comes in handy while availing a loan as financial companies ask to see your returns for the last three years. Filing your taxes might get a little complex when you try to do it on your own and hence, you have many websites to help to file taxes online. Different taxes that need to be filed are:

Income Tax

This tax is levied on the yearly income of a person, by the Indian government. The tax year is from April 1 to March 31. Depending on the total income per annum, the payer falls into different tax slabs, which decides the amount that the payer needs to pay.

GST

Goods & Service Tax (GST) is a new indirect tax levied on consumers of value-added goods and services. This has replaced various other indirect taxes that was in effect previously and made it standardized. It is based on “destination principle” where it is levied on each stage of the supply chain and passed on to the final consumer who has to bear it.

TDS

Tax Deducted at Source is an indirect form of tax. It is deducted at the source where the income is generated. For example, the employer deducts the tax from the salaries of its employees before paying the salaries. The employer needs to file the return of such tax on a quarterly basis.

Due to the various complicated information and calculation required while filing a tax return many websites are dedicated to providing this service. Such websites also assist in other services such as LLP company registration process.

Limited Liability Partnership is a partnership which exhibits characteristics of a corporation as well as a partnership. In such companies, some or all partners are exposed to limited liabilities, a lot like a shareholder. There are various advantages to registering your company as an LLP.

There is no minimum cap to the capital required in an LLP and can be formed with the least amount of capital available.

It only requires two minimum partners to be recognized as LLP and there is no limit to the maximum number. Each partner is not liable for misconduct by the other partner.

In most scenarios, it is not mandatory for an LLP to get their accounts audited. This is in direct contrast to a public or private limited company. Audit becomes compulsory only in two scenarios. First, if the contribution of an LLP is more than 25 Lakhs a year. Second, if the annual turnover of an LLP exceeds 45 Lakhs.

LLPs are not liable for Dividend Distribution Tax. They are liable to pay income tax but if the partners decide to withdraw from the profit of the company, no DDT is levied, unlike a company. The registration cost for an LLP is considerably lower than that of a company. Moreover, due to less mandatory requirements, the process in itself is much simpler and there is no dearth of online assistance that is available.

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