What is Limited Liability Partnership

I think, you all read Indian Partnership Act 1932 in Commercial Law book. According to this, partnership may only be unlimited. Suppose, Partnership has taken loan of Rs. 10,00,000 and its total assets' market value is just Rs. 5,00,000. Excess of loan over assets will be paid by  partner's personal assets. This is unlimited liability partnership. But limited liability partnership is just opposite this. According to limited liability partnership, partner's liability will be limited just like the liability of shareholders of company. No one have right to use partners' personal assets for paying debt of partnership firm. Now, you can ask question :

Q:- 1. Is Limited Liability Partnership Allowed in India? 

Ans : Yes, for this Ministry of Corporate Affairs has made new act and this is called The Limited Liability Partnership Act 2008 which has started to apply in India from January 9, 2009. According to the rules of this law, partners of LLP can operate the business directly but they have only limited liability in case firm will bankrupt.

Q:- 2. How will We calculate tax on LLP?

Ans. Taxable income and tax calculation on it is easy. It will be same as general unlimited partnership for tax calculation purpose.

Q:- 3. What is the Maximum Numbers of Partners in LPP?

Ans. Unlimited like shareholders.

Q:- 4. Can Chartered Accountant Work under Limited Liability Partnership?

Ans. Still not but soon yes, chartered accountant can work under LLP because today, ICAI's council has issued notification. In this notification, ICAI has sent the  proposal to Ministry of Corporate Affairs for amending this LLP Law. Soon, it will be accepted and CAs can make limited partnership at global level and these numbers may increase from 20.

Related : Partnership Accounting 


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Accounting Education: What is Limited Liability Partnership
What is Limited Liability Partnership
Accounting Education
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