DOI Prefix : 10.9780 | Journal DOI : 10.9780/22307850
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Volume : III, Issue : XI, December - 2013

“ Practical Issues In Taxation Of A Partership With Special Reference To A Llp”

Sanjay Kumar Sharma , Renu Yadav and Poonam

DOI : 10.9780/22307850, Published By : Laxmi Book Publication

Abstract :

A general partnership and a Limited Liability Partnership (LLP) both own separate governing laws. While a partnership firm is an unincorporated entity under the Indian Partnership Law, a LLP Firm is an incorporated entity having a separate legal existence from its partners under the Limited Liability Partnership Law. As far as the Income Tax Law is concerned, it recognizes a partnership as a separate tax entity for charge of income tax on the income of the partnership firm. The Income Tax Law contains similar provisions for charge of income tax on the income of a partnership firm and a LLP. Taxable income is computed after allowing certain deductions from the profits on account of payment of remuneration and interest to its partners subject to certain conditions. However, there exist certain procedural differences in taxation of a LLP such as tax recovery procedure. Apart from this, there are certain unique tax advantages which a LLP firm enjoys over a company. These include nonapplicability of certain provisions relating to dividend distribution tax, provisions relating to deemed dividends tax and so on. In view of the concept of LLP being new in India, certain issues pose challenge with regard to taxation of a LLP firm in India. This research article attempts to analyse the tax issues of a partnership with special reference to a LLP, the conversion of company into a LLP and the possible ways to tackle these tax issues.

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Cite This Article :

Sanjay Kumar Sharma , Renu Yadav and Poonam, (2013). “ Practical Issues In Taxation Of A Partership With Special Reference To A Llp”. Indian Streams Research Journal, Vol. III, Issue. XI, DOI : 10.9780/22307850,

References :

  1. Official website of the Income Tax Department – Income Tax Act, 1961 –
  2. The Gazette of India, Extraordinary Part II-Section I, New Delhi, 9th January, 2009, Ministry of Law and Justice, The Limited Liability Partnership Act, 2008.
  3. Minor is a person, male or female, who has not completed the age of 18 years [According to the Indian Majority Act, 1875]
  4. Wealth tax is a tax in respect of the net wealth as on the valuation date of individual, Hindu undivided family and company at the rate of 1% under the Indian Wealth Tax Act, 1957 in excess of specified limit of rupees 30 lakh.
  5. Central Board of Direct Taxes Circular No. 684 dated 10th June, 1994
  6. “The Guidance Note of the ICAI on Tax Audit, 2013 for calculation of gross sales, turnover or gross receipts.”

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