What is the Turnover Limit for LLPs in India? A Guide for Compliance and Audit Rules
What is the Turnover Limit for LLPs in India? A Guide for Compliance and Audit Rules
A Limited Liability Partnership (LLP) is one of the most flexible and entrepreneur-friendly business structures in India. It is especially popular among professionals, startups, and small businesses. However, even though LLPs enjoy relaxed compliance compared to companies, they must still adhere to certain financial thresholds, particularly related to turnover.
One of the most common questions among LLP partners is:
“What is the turnover limit for LLP in India?”
This blog will guide you through the current turnover limits applicable to LLPs under Indian law, including audit requirements, compliance obligations, and taxation impact.
📌 What is an LLP?
An LLP (Limited Liability Partnership) is a legal entity registered under the LLP Act, 2008. It combines the features of a traditional partnership and a private limited company, offering the benefits of limited liability, separate legal identity, and flexible internal management.
Now, let’s understand how turnover limits apply to LLPs.
📊 What is the Turnover Limit for LLPs?
As per Indian law, turnover limits are important for determining audit requirements and compliance obligations for LLPs.
✅ 1. Statutory Audit Requirement Under the LLP Act, 2008
An LLP is required to get its accounts audited if it meets either of the following criteria:
• Turnover exceeds ₹40 lakhs in a financial year, or
• Capital contribution exceeds ₹25 lakhs
👉 If an LLP crosses ₹40 lakh turnover, a statutory audit becomes mandatory, even if the capital is low.
🧾 Why is Turnover Limit Important for LLPs?
The ₹40 lakh threshold is significant for several reasons:
📌 1. Audit Applicability
LLPs with a turnover below ₹40 lakh are exempt from mandatory audit, which helps them save time and cost.
However, once this threshold is crossed:
• The LLP must appoint a Chartered Accountant to conduct an audit
• Audit report must be filed along with Form 8 (Statement of Accounts and Solvency)
• Delay in audit or filing can lead to penalties
📌 2. Financial Discipline and Transparency
A statutory audit ensures:
• Accurate representation of financials
• Transparency in partner transactions
• Enhanced trust among investors, banks, and vendors
🧾 Turnover vs Tax Audit Under Income Tax Act
Apart from the LLP Act, turnover is also relevant under the Income Tax Act, 1961:
• LLPs must undergo a tax audit if their turnover exceeds ₹1 crore (for businesses) or ₹50 lakh (for professionals)
• This is applicable even if the LLP is exempt from audit under the LLP Act
✅ Note: The tax audit limit may change depending on digital transactions and government updates.
📋 Annual Compliance Based on Turnover
Here’s how compliance varies based on turnover:
| Turnover Range | Audit Required? | ITR Form | MCA Form |
| Up to ₹40 lakh | No | ITR-5 | Form 11, Form 8 |
| Above ₹40 lakh | Yes (LLP Act) | ITR-5 with audit | Form 11, Form 8 with audit report |
| Above ₹1 crore | Yes (IT Act) | ITR-5 with tax audit | As above |
💼 Practical Example
Let’s say your LLP provides digital marketing services and earns ₹45 lakh in a year:
• Since turnover exceeds ₹40 lakh, an LLP audit is mandatory under the LLP Act
• If business income crosses ₹1 crore, a tax audit under the Income Tax Act is also needed
👉 Failing to conduct audits can result in fines starting from ₹100 per day and legal notices from the Registrar of Companies (ROC).
🏁 Final Thoughts
• ₹40 lakh is the threshold under the LLP Act for statutory audit
• ₹1 crore (business) and ₹50 lakh (professionals) under the Income Tax Act for tax audit
Staying compliant with these turnover-based rules ensures your LLP remains legally sound, financially transparent, and investor-ready.
