One-time Penalty Reduction & Prosecution Immunity for LLP — Article Taj Pharmaceuticals

The Government has recently unveiled a scheme that provides prosecution immunity and reduces the penalty for late filing various LLP returns.

Under this scheme, a LLP registered in India can file any overdue LLP return paying a maximum penalty of Rs.5000 per form before 13th June 2020. Persons availing relief under this scheme will also enjoy immunity from prosecution. Post the expiry of this scheme, the normal late filing penalty of Rs.100 per form per day will be applicable — leading to penalty in lakhs of rupees and prosecution by the Registrar for compliance lapses.

The following forms can be filed under this scheme by payment of reduced penalty:

• Form 3 — Changes to LLP Agreement
• Form 4 — Changes to Partners
• Form 8 or Form 11 — LLP Annual Returns

Govt announces one-time amnesty scheme for non-compliant LLPs

The scheme, LLP Settlement Scheme, 2020, allows for a one-time condonation of delay in filing statutorily required documents with the Registrar of Companies (RoC), it added.

The ministry of corporate affairs (MCA) has launched a one-time amnesty scheme for Limited Liability Partnership (LLP) companies that have failed to file the requisite statutory documents such as annual statements, change in directors, etc.

The move is aimed at promoting ease of doing business as well as to cleanse the system. it provides these companies a one-time relaxation in payment of additional fees and immunity from prosecution.

“As part of government’s constant efforts to promote ease of doing business it has been decided to give a one-time relaxation in additional fees to defaulting LLPs to make good their default by filing pending documents and to serve as a compliant LLP in future,” MCA said in a circular.

The scheme, LLP Settlement Scheme, 2020, allows for a one-time condonation of delay in filing statutorily required documents with the Registrar of Companies (RoC), it added.

On the rationale behind such a scheme, an official source said it has been noticed that many LLPs defaulted in filing various forms. Presently, on non-filing of these forms, LLPs can file such documents on payment of additional fee for Rs 100 for every day of such delay.

The official added that it was also noted that a large number of LLPs are not filing their due statutory documents like information on LLP agreement and changes, notice of appointment of partner/ designate partner and other annual documents in a timely manner with the RoC.

“MCA received representations from various quarters on waiver of fee or condonation of delay and relaxations in additional fee on the ground of excessive financial burden. See, many firms have a capital of Rs 1 lakh and have penalties amounting to Rs 2–3 lakh, which stops them from approaching for a solution due to the high penalty amount. The one-time scheme corrects this,” he explained.

India has around 1.25 lakh active LLPs, of which a majority are in business services, followed by trading, manufacturing and real estate & renting. This one-time scheme benefits around 25,000–30,000 LLPs that have a capital base of around Rs 1 lakh.

AMRG & Associates chief executive Gaurav Mohan said, “the government has decided to cleanse the entire tax and regulatory structure within which businesses operate. Under this initiative they have successfully launched unique resolution schemes in direct taxes as well as indirect taxes, now a similar scheme has been launched by MCA for LLP’s. This one-time relaxation in payment of additional fees and immunity from prosecution would be a good impetus for all the defaulters to come forward and voluntarily accept the compliance framework”.