LLP Stamp Duty in India

LLP Stamp Duty in India

LLP Stamp Duty in India

If you're registering a Limited Liability Partnership (LLP) in India, there's one significant expense which nobody takes into consideration - LLP Stamp Duty. Most entrepreneurs just consider ROC filing charges, but stamp duty's not less significant. Tell us about what is LLP Stamp Duty, how much you need to spend and why it's significant.

What is LLP Stamp Duty?

Stamp duty is indeed the state-level taxing of legal documents with the intentions of having them made enforceable and valid.

In the case of LLP, such responsibility lies on the LLP Agreement – whether the rights, liabilities and obligations of partners have been outlined.

You won't have a legally enforceable LLP Agreement in court if you fail to pay the due stamp duty.

Who decides LLP Stamp Duty?

ROC fees for India have been standardized, but the LLP Stamp Duty is stateside and determined by each state under its own separate law.

• They have varying percentages for each state.
• This is based on the level of capital contribution of LLP.
• In certain states, the duty is determined and static, and in certain states, it's computed on the basis of slab.

How is payment of LLP Stamp Duty made?

LLP Stamp Duty is to be paid on the occasion of signing of the LLP Agreement. The said occasion should ideally happen within 30 days of incorporation.

If you're patient, then:

• Penalty can be given (sometimes 10 times of regular duty).
• The agreement shall not be valid in court.

LLP Stamp Duty: State-Wise Illustrations

These are the rates of some popular states:

• Delhi – Rs200 to Rs1 lakh capital; Rs4,000 for over Rs1 lakh.
• Maharashtra – Rs1,000 upto Rs50,000; 0.2% of contribution (max Rs5,000). Karnataka – Rs500 for Rs1 lakh and less; Rs1,000 for more than.
• Tamil Nadu - Rs500 flat.

(Note: The rates continue to fluctuate now and then according to state govt. rules.)

How to pay for LLP Stamp Duty?

There are 2 ways:

• E-Stamping – More states now offer online e-stamp service.
• Stamp Paper - Traditional method by which you have to buy the paper from the stamp seller.

LLP Stamp Duty is required why?

• Your LLP Agreement is legally valid.
• Rights of partners in case of conflict.
• Penalties and legal issues are circumvented.
• Credibility of business compliance is enhanced.

Key Points

• LLP Stamp Duty is state-based and is dependent upon capital contribution.
• You must file this within 30 days of incorporation.
• In the absence of stamp duty, your contract shall not hold in court.
• In case you plan to register LLP, see to it that stamp duty is duly paid according to state laws.

efiling company facilitates you for LLP Registration, Agreement Drafting and Stamp Duty Compliance throughout India. Call us for smooth LLP setup.