Applicability of Audit in LLP
In simple term, audit is examination and verification of the books of Accounts of business to assess the financial health of company. Most of the statute requires business to have audited its books of account to know whether the financial statements present “True and fair view”.
Rational behind to prescribe audit is to arrive at profit/ loss figure to assess the correct Tax liability of business because Tax is major source of revenue to the Government of India.
IS AUDIT MANDATORY?
Limited Liability Partnership is required to get its books of account audited if its turnover in any financial year exceeds Rs.40 lakh and the contribution exceeds Rs.25 lakh.
APPOINTMENT OF AUDITOR
LLPs must appoint the auditor before 30 days before the end of financial year.
The partners of the firm may appoint an auditor:
- Within 30 days before the end financial year
- To fill up the vacancy of the office of auditor
- At anytime within a financial year.
If in any situation, the partners are not able to appoint an auditor for the financial year then they can assume this as their responsibility.
TAX RATES FOR LLP
Basic Tax Rate 30%
Surcharge 12%, if income exceeds Rs. 1 Crore
Education Cess 2%
Secondary & 1%
Higher education cess
Effective Tax Rate for income 30.90%
Upto Rs. 1 crore
Alternate Minimum Tax Rate 18.50%