Abstract: Limited Liability Partnership (LLP) and general partnership is being treated as equivalent (except for recovery purposes) in the Income-tax Act, 1961. As opposed to a corporate entity, distribution made by an LLP to its partners is tax exempt i.e. there is no dividend distribution tax on distribution to partners and further, an LLP is not subject to Minimum Alternate Tax. The Finance act, 2010 has proposed the much awaited provisions with respect to tax treatment on conversion of existing private companies and unlisted public companies into LLPs. And the finance act 2011 has introduced the application of AMT on LLPs by inserting new chapter-XII-BA consisting of four sections 115JC, 115JD, 115JE and 115JF in the income tax act 1961.
Taxation of LLPs is one of the most important issues to be considered both while forming new LLPS or converting existing firms/private or unlisted companies into LLPs. There are specific provisions in income tax act for the tax implication on conversion of private company or unlisted public company into LLP.
Title: Limited Liability Partnership-Taxation Issues
Author: Himanshu Arora
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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