LLP Agreement Stamp Duty 2020: What You Need to Know
When starting a Limited Liability Partnership (LLP) in India, one of the important legal documents you need to create is the LLP Agreement. This agreement outlines the terms and conditions of the LLP, including the rights and duties of partners, profit sharing, and more. But did you know that there is a stamp duty levied on the LLP Agreement in India? In this article, we`ll explore the details of the LLP Agreement Stamp Duty in 2020 and what you need to know.
What is LLP Agreement Stamp Duty?
The LLP Agreement Stamp Duty is a tax levied by the government on the LLP Agreement. The stamp duty is a fee paid for the legal recognition of the LLP Agreement. It is a tax that is charged on the basis of the value of the LLP Agreement. The government levies the stamp duty to earn revenue and maintain legal records of the LLP Agreement.
How is the LLP Agreement Stamp Duty calculated?
The LLP Agreement Stamp Duty in India is calculated based on the value of the LLP Agreement. The value of the agreement is determined by the contribution made by each partner and the LLP`s net worth. The stamp duty rate varies from state to state and can range from 0.01% to 1% of the LLP Agreement value.
For example, if the value of an LLP Agreement is Rs. 1 crore and the stamp duty rate in the state is 0.01%, the stamp duty payable will be Rs. 10,000. The LLP Agreement Stamp Duty should be paid within 30 days of executing the agreement.
LLP Agreement Stamp Duty in 2020
The LLP Agreement Stamp Duty in India has undergone a few changes in recent years. In 2020, the government introduced a new threshold for the LLP Agreement Stamp Duty. The threshold was raised from Rs. 5,000 to Rs. 15,000, which means that LLP Agreements valued up to Rs. 15,000 are exempted from stamp duty payment.
This move by the government was aimed at providing relief to small LLPs and startups with a limited budget. The new threshold will encourage more startups to register as LLPs, as the cost of starting an LLP will be reduced.
Conclusion
In conclusion, if you`re planning to start an LLP in India, it`s important to understand the LLP Agreement Stamp Duty and how it`s calculated. The value of the LLP Agreement determines the stamp duty payable, and the stamp duty rate varies from state to state. With the new threshold of Rs. 15,000 in 2020, small LLPs and startups will benefit from the relief provided. Ensure that you pay the LLP Agreement Stamp Duty within 30 days of execution to avoid penalties.