How to Close LLP in India: A Complete Legal and Compliance Guide

A Limited Liability Partnership (LLP) is a popular business structure in India, combining the benefits of a company and a partnership. However, when an LLP is no longer operational or viable, it becomes essential to formally close it through a legal process to avoid unnecessary compliance, fines, or tax notices.

The LLP Act, 2008 and related rules provide a structured process to legally close an LLP in India. This article explains how to close LLP step by step, including legal requirements, documents needed, and government filings.

When Should an LLP Be Closed?

You should consider closing an LLP if:

• The LLP has stopped business operations
• There are no assets or liabilities
• Partners are not willing to continue operations
• The LLP is inactive and not generating revenue

Failing to close an inactive LLP can lead to penalties for non-filing of annual returns or statements of accounts.

Modes of Closing an LLP in India

There are two main ways to legally close an LLP:

1. Voluntary Strike-Off using Form 24

This is the most common method to close a non-operational LLP. The Registrar of Companies (RoC) removes the LLP’s name from its register.

2. Compulsory Winding Up by Tribunal

This is used in cases of fraud, legal disputes, or when the LLP has liabilities. It is a lengthy and court-driven process and applies only in limited circumstances.

This guide focuses on the strike-off method using Form 24, which is simple and cost-effective.

Eligibility Criteria for Closing LLP via Form 24

Before applying for closure, ensure your LLP meets the following conditions:

• The LLP has not carried on any business for at least one year
• There are no liabilities or creditors
• All partners agree to close the LLP
• Latest compliance filings like Form 11 (Annual Return) are completed
• PAN card and bank accounts are closed or dormant

Step-by-Step Process on How to Close LLP in India

Step 1: Hold a Meeting and Obtain Consent

A resolution must be passed by all partners agreeing to voluntarily close the LLP. This resolution is not required to be filed with RoC but must be retained for records.

Step 2: Close Bank Account

Before closure, all bank accounts in the name of the LLP must be closed. A bank closure certificate is required as proof.

Step 3: Prepare Statement of Accounts

You must prepare a Statement of Accounts showing nil assets and liabilities, certified by a Chartered Accountant. The statement should not be older than 30 days from the filing date.

Step 4: Affidavit and Indemnity Bond

All partners must sign:

• An Affidavit stating the LLP has ceased operations
• An Indemnity Bond declaring responsibility for any future liabilities

These must be notarised and attached to Form 24.

Step 5: File Form 24 with MCA

Form 24 is filed with the Ministry of Corporate Affairs (MCA) portal along with the following documents:

• Statement of Accounts
• PAN card of LLP
• Aadhaar/PAN of designated partners
• Affidavits and Indemnity Bonds
• Resolution for closure
• Bank closure proof
• IT return acknowledgment (if applicable)

Step 6: Acknowledgement and Review

The RoC will verify the documents. If satisfied, the LLP’s name will be struck off the register, and a formal notice will be published on the MCA website.

Documents Required to Close LLP

Here’s a quick checklist:

• Board Resolution for closure
• Latest Form 11 (Annual Return) filing proof
• Statement of Accounts (CA certified)
• Affidavit and Indemnity Bonds from all partners
• Copy of PAN and Aadhaar of partners
• Bank account closure certificate
• Consent letter of all partners
• Income Tax Return copy (if filed)

Timelines and Cost

• Time Taken: 60 to 90 days (approx.)
• Government Fee: Rs. 500
• Professional Charges: Vary based on documentation and advisory support

Common Mistakes to Avoid

• Filing outdated or uncertified financials
• Not closing the bank account before applying
• Submitting incomplete affidavits
• Delays in notarisation or incorrect documentation

It is advisable to consult a professional for a seamless closure process.

FAQs on How to Close LLP in India

1. Can an LLP be closed without filing Form 11?
   No. Form 11 (Annual Return) must be filed before applying for closure via Form 24.
2. What happens if an LLP is inactive but not closed?
   Non-filing attracts penalties of Rs. 100 per day per form with no maximum limit.
3. Can LLP with pending loans be closed?
   No. The LLP must have zero liabilities to apply for closure through Form 24.
4. Is audit required before closing LLP?
   If the turnover is below audit limit, CA-certified financials are enough. No audit is mandatory for nil activity.
5. Can LLP be closed if GST registration is active?
   You must cancel the GST registration before filing Form 24.
6. Is partner’s digital signature (DSC) required for closure?
   Yes. DSC of a designated partner is mandatory for filing Form 24 on the MCA portal.
7. How long does it take for MCA to process the closure?
   Usually within 2 to 3 months, depending on document accuracy and RoC workload.
8. What if one partner disagrees to close the LLP?
   All partners must give written consent. Disagreement may lead to legal complications.
9. Can I reopen an LLP after closing it?
   No. Once the LLP is officially struck off, it cannot be reactivated.
10. Who can help me file Form 24 correctly?
    A Chartered Accountant or compliance consultant like Tradeviser can assist in filing and documentation.

Need Help With Closing Your LLP?

Let Tradeviser’s Expert Consultancy Services take care of your LLP closure. From preparing Form 24 to managing legal documentation and MCA filings, we ensure a smooth and hassle-free shutdown of your LLP. Avoid penalties and legal issues. Contact us today for expert assistance.