Form DPT-3: Due Date, Purpose, Return Date

Feb 7, 2025
Private Limited Company vs. Limited Liability Partnerships

Running a business in India comes with its fair share of challenges—managing finances, growing revenue, and keeping up with endless compliance requirements. One such crucial yet often overlooked filing is Form DPT-3.

This annual filing is mandatory for all companies in India—except government companies—to report details of deposits, loans, and non-deposit receipts. The Form DPT-3 due date is June 30th each year, making it essential for businesses to meet this deadline to avoid penalties and maintain good standing with regulatory authorities.

Table of Contents

What is Form DPT-3?

Form DPT-3 is an annual return form that companies must file to report deposits and outstanding loan details. It is a statutory requirement under the Companies Act 2013, ensuring that businesses remain compliant and transparent in their financial dealings. The form covers:

  • Deposits received by the company
  • Non-deposit loans taken from directors, shareholders, or other sources
  • Any other amounts that are classified as financial liabilities

The primary objective of this filing is to prevent malpractices related to undisclosed financial transactions and to strengthen corporate governance.

<H2> Applicability and Requirements for DPT-3 Form

Form DPT-3 filing applies to all companies except government companies. This includes:

Key requirements for DP3 include:

  • Annual Filing Deadline: Companies must submit Form DPT-3 by June 30 each year, covering financial transactions for the previous fiscal year.
  • Financial Year Coverage: The form includes details of financial liabilities up to March 31 of the relevant financial year.
  • Auditor Verification: Companies must ensure that the reported figures are verified by auditors to maintain accuracy and compliance.

Penalties for Non-Compliance with Form DPT-3 Filing

Failure to file Form DPT-3 on time can result in significant penalties under the Companies Act 2013. The penalties include:

  • A flat penalty of up to ₹5,000 for the company.
  • Additional daily fines of ₹500 per day for continued non-compliance.
  • Officers responsible for the filing may also be penalised with additional fines.

Ensuring timely submission is essential to avoid legal repercussions and unnecessary financial burdens.

Preparing for the DPT-3 Filing

To ensure a smooth DPT-3 filing process, companies should follow these steps:

  1. Review Financial Transactions: Examine all deposits, loans, and non-deposit receipts received during the financial year.
  2. Obtain Audit Reports: Work with auditors to verify and validate the data before submission.
  3. Gather Necessary Documentation: Collect supporting documents such as loan agreements, receipts, and auditor reports.
  4. Consult Experts: If there are complexities in reporting, seek advice from compliance professionals or legal experts.

Information Required to Fill DPT-3 Form

Companies need to provide the following details while filling out Form DPT-3:

Other financial liabilities as per the balance sheet-

  • Net Worth of the Company: The net worth is calculated as total assets minus total liabilities based on the most recent financial year-end.
  • Particulars of Charge (if any): Companies must disclose any charges or encumbrances on their assets. This includes mortgages, liens, or any other security interests held against company-owned properties or resources.
  • Total Amount Outstanding as of March 31st, 2020 including-  
  • Deposits received from individuals or entities.
  • Loans borrowed from banks, directors, or other companies.
  • Any other non-deposit receipts that need disclosure.
  • Particulars of Credit Rating (If Applicable): Companies with an assigned credit rating should provide: Name of the credit rating agency (e.g., CRISIL, ICRA, CARE, etc.) and the rating assigned

Form DPT-3 Due Date

The due date for filing Form DPT-3 is June 30th of every financial year. Companies should ensure timely submission to avoid penalties and maintain regulatory compliance.

Documents Required to File DPT-3 Form

To complete the Form DPT-3 filing, companies must submit:

  • List of Depositors
  • Deposit Insurance Contract
  • Copy of the Trust Deed
  • Copy of the Instrument Creating Charge
  • Details of Liquid Assets
  • Outstanding Receipts of Money or Loans
  • Auditor’s Certificate

Looking to register your company online? Get started with Razorpay Rize’s Company Registration services! 

Conclusion

Form DPT-3 is a critical compliance requirement for companies in India. Filing this might feel like just another compliance task, but it’s actually a crucial step in keeping your business financially transparent and legally sound. Missing the deadline can lead to penalties, unnecessary stress, and last-minute scrambling. Instead of rushing at the last minute, take a proactive approach—review your records, coordinate with your auditors, and get your documents in order well in advance.

Frequently Asked Questions

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1,499 + Govt. Fee
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  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

Is Form DPT-3 mandatory?

Yes, Form DPT-3 is mandatory for all companies (except government companies) that have received deposits, loans, or other non-deposit receipts. It must be filed annually, as per the Companies Act of 2013, to ensure financial transparency and regulatory compliance.

What is the penalty for delay in DPT-3?

If a company fails to file Form DPT-3 on time, penalties may include:

  • A fine of ₹5,000 for the company.
  • An additional fine of ₹500 per day for continued non-compliance.
  • Officers in default may also face penalties, which can go up to ₹2 lakh.

What is the fee for DPT-3?

The filing fee for Form DPT-3 depends on the company’s authorised share capital:

  • ₹200 for companies with capital up to ₹1 lakh
  • ₹300 for ₹1-5 lakh
  • ₹400 for ₹5-25 lakh
  • ₹500 for ₹25 lakh-1 crore
  • ₹600 for ₹1 crore or more

Late filing attracts additional fees, increasing with the delay period.

Is DPT-3 applicable to LLPs?

No, Form DPT-3 is not applicable to LLPs (Limited Liability Partnerships). It applies only to private and public limited companies, as LLPs are governed by the LLP Act of 2008 and have different compliance requirements.

Can we file DPT-3 after the due date?

Yes, you can file DPT-3 after the due date, but it will attract late filing fees and penalties. To avoid unnecessary financial and legal consequences, it is advisable to file before the June 30 deadline.

Is DPT-3 mandatory every year?

Yes, DPT-3 is an annual compliance requirement that must be filed every year by June 30, reporting financial data from the previous fiscal year.

What is the purpose of filing DPT-3?

The purpose of Form DPT-3 is to:

  • Ensure financial transparency by reporting deposits, loans, and non-deposit transactions.
  • Help regulators track company borrowings and financial stability.

Ensure compliance with the Companies Act of 2013 and avoid penalties.

Sarthak Goyal

Sarthak Goyal is a Chartered Accountant with 10+ years of experience in business process consulting, internal audits, risk management, and Virtual CFO services. He cleared his CA at 21, began his career in a PSU, and went on to establish a successful ₹8 Cr+ e-commerce venture.

He has since advised ₹200–1000 Cr+ companies on streamlining operations, setting up audit frameworks, and financial monitoring. A community builder for finance professionals and an amateur writer, Sarthak blends deep finance expertise with an entrepreneurial spirit and a passion for continuous learning.

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FSSAI Registration and License Process Explained

FSSAI Registration and License Process Explained

If you’re running a food business in India, chances are you’ve heard about FSSAI. But what exactly is it, and why is it so important? FSSAI stands for the Food Safety and Standards Authority of India- the apex regulatory body responsible for ensuring food safety and hygiene standards across the country.

For any food-related business operating in India, obtaining an FSSAI registration or license is mandatory. This ensures that the business complies with the Food Safety and Standards Act, 2006, enhancing consumer trust and legal credibility.

In this blog, we’ll walk you through everything you need to know about FSSAI, from types of licenses and who needs them, to how to apply, what documents you need, and even penalties if you don’t comply.

Table of Contents

FSSAI Registration

FSSAI Registration is the basic license issued to small-scale food businesses by the state food safety authorities. It applies primarily to small food business operators (FBOs) whose turnover falls below a certain threshold and who operate within a single state.

This registration is essential to legally operate a food business and ensures compliance with food safety norms. However, for larger businesses or those operating across multiple states, an upgraded license (State or Central License) is required.

Food Business Operators Who Need FSSAI Registration?

The following food businesses typically require FSSAI Registration:

  • Small Manufacturers: Small-scale producers of food items with limited turnover.
  • Transporters: Entities involved in the transportation of food within the state.
    Retailers: Small shops, grocery stores, or vendors selling food products directly to consumers.
  • Small Food Businesses: Street food vendors, hawkers, or home-based food businesses.
  • Medium Food Businesses: Hotels, Restaurants & Bars

Types of FSSAI Registration

Beyond legal compliance, filing ITR offers several advantages:

Type of License Turnover Limit Operational Scale Issued By
Basic Registration Up to INR 12 Lakhs annually Small food businesses within one state State authority
State License INR 12 Lakhs to 20 Crores Medium-sized businesses operating within a state State authority
Central License Above INR 20 Crores Large businesses, importers, exporters and interstate operations Central authority

Benefits of Obtaining an FSSAI Food License

Obtaining an FSSAI license offers multiple advantages:

  • Consumer Trust: Shows commitment to food safety, increasing customer confidence.
  • Legal Compliance: Avoids penalties and legal issues by following regulations.
  • Business Expansion: Facilitates scaling operations across states and international markets.
  • Brand Credibility: Enhances brand image by adhering to recognised safety standards.
  • Access to New Markets: Many retailers and e-commerce platforms require FSSAI certification.

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FSSAI Registration Eligibility

Below is the eligibility criteria for FSSAI registration:

  • Annual turnover up to ₹12 lakhs.
  • Operates only within a single state.
  • Includes small-scale manufacturers, traders, retailers, hawkers, and temporary stall owners.

FSSAI License Eligibility

Businesses requiring State or Central Licenses typically fulfil these conditions:

  • Annual turnover between ₹12 lakhs and ₹20 Crores (State License).
  • Annual turnover exceeding ₹20 crores (Central License).
  • Operations across multiple states or involved in import/export.
  • Large-scale food processors and manufacturers.

Food Capacity Limit Required for Obtaining FSSAI Registration

License Type Production/Handling Capacity
Basic Registration Up to 100 kg or 100 litres per day
State License Between 100 kg/litres to 2 tons per day
Central License Above 2 tons per day

Note: These limits may vary based on specific food categories and local regulations.

Documents Required for Obtaining the FSSAI Registration/License

Common documents needed include:

  • Identity Proof (Aadhar, PAN Card)
  • Address Proof of Business Premises (Rent Agreement/Utility Bill)
  • Passport-sized Photographs of the Applicant
  • Certificate of Incorporation (for companies)
  • Food Safety Management Plan or Statement of Food Products
  • NOC from the local municipality or health department
  • Proof of possession of premises (ownership or lease)

How to Apply for FSSAI Registration Online?

Applying for an FSSAI Registration or License online is a straightforward process — and the best part is, you can do it all from the comfort of your home or office.

Step 1: Visit the Official FSSAI Website

Head over to the official Food Safety Compliance System (FoSCoS) portal: https://foodlicensing.fssai.gov.in

Step 2: Create an Account

Click on “Sign Up” and fill in your details like name, mobile number, email ID, and state of operation. Once registered, you’ll receive login credentials via email or phone.

Step 3: Fill in the Application Form

After logging in, choose the appropriate license type based on your business size and turnover (Basic, State, or Central). Then, fill in the required details such as:

  • Business name and address
  • Type of food business (manufacturer, distributor, caterer, etc.)
  • Contact information
  • Business turnover and food handling capacity

Step 4: Upload Required Documents

Upload scanned copies of all the necessary documents.

Step 5: Pay the Application Fee

Once the form is complete and documents are uploaded, proceed to pay the applicable fee online. The amount depends on the license type and duration selected (1–5 years).

Step 6: Submit the Application

Double-check all details before clicking “Submit”. Once submitted, you’ll receive an application reference number which you can use to track your status.

Step 7: Track Your Application Status

Use the “Track Application” feature on the dashboard to monitor progress. You’ll receive notifications if additional info or documents are required.

Once submitted, your application will be reviewed by the local food safety officer. They may conduct a physical inspection (for licenses) or approve the application directly (for Basic Registrations). Upon approval, you’ll receive your FSSAI certificate online.

FSSAI License Cost & Validity

License Type Fee Structure Validity
Basic Registration INR 100 per year 1 to 5 years
State License INR 2000 to 5000 per year 1 to 5 years
Central License INR 7500 per year 1 to 5 years

Costs may vary based on license duration and type.

FSSAI Registration Status

How to Check Status:

  1. Visit the FSSAI portal.
  2. Log in using registered credentials.
  3. Navigate to the “Application Status” section.
  4. Enter your Application/Registration number.
  5. View the current status (Pending, Approved, Rejected).

FSSAI Penalty and Offences

The Food Safety and Standards Authority of India (FSSAI) takes food safety very seriously — and rightly so. Non-compliance can lead to hefty penalties, legal action, or even imprisonment, depending on the nature and severity of the offense.

Here’s a breakdown of common offences under the Food Safety and Standards Act, 2006, and their corresponding penalties:

Offense Penalty
Operating without a license Fines up to ₹5 lakh or jail time
Selling adulterated or misbranded food Fines up to ₹10 lakh
Selling unsafe or substandard food Imprisonment and fines
Not following food safety standards Penalties depend on the violation

Renewal of FSSAI License

Renew your license at least 30 days before it expires. The process is similar to applying for a fresh — just log in, fill out renewal forms, upload updated documents, and pay the fees. Missing renewal deadlines can lead to fines or even suspension of your license.

FSSAI License for Cloud Kitchen

Cloud kitchens, operating without a physical dine-in space, are also required to obtain FSSAI licenses. Typically, they fall under:

  • Basic Registration: If turnover and scale are small.
    State License: For larger cloud kitchens with higher turnover.

The application process is the same, focusing on food safety management specific to cloud kitchens.

Conclusion

FSSAI registration and licensing are essential for any food business in India. They help keep your customers safe, build your brand, and keep you on the right side of the law.

So, if you're running any kind of food business, be it a small catering outfit, a packaged snack brand, or an export-oriented manufacturing unit, FSSAI must be part of your growth strategy. It’s a small step toward compliance, ensuring that you’re meeting the highest standards of food safety and hygiene.

Frequently Asked Questions

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Register your Limited Liability Partnership in just 1,499 + Govt. Fee

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Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What is the difference between an FSSAI license and registration?

Proprietorship compliance refers to the set of legal, financial, and tax-related requirements that a sole proprietorship must fulfil. This includes:

  • FSSAI Registration is for small food businesses with an annual turnover of up to ₹12 lakh. It’s a basic registration issued by the State Authority.
  • An FSSAI License is required for larger businesses and is categorised into:
    • State License (₹12 lakh–₹20 crore turnover, within one state)
    • Central License (above ₹20 crore turnover or interstate operations)

Is GST compulsory for an FSSAI license?

No, GST is not mandatory to obtain an FSSAI license or registration. However, for certain food businesses, especially those that sell online or supply to other businesses, having a GST registration can be beneficial or even required.

Who is eligible for FSSAI?

Any Food Business Operator (FBO) involved in manufacturing, processing, storing, distributing, or selling food in India is eligible and required to get FSSAI registration or a license. This includes:

  • Home-based food sellers
  • Restaurants, cafes, and cloud kitchens
  • Food processors and repackers
  • Online food sellers
  • Importers/exporters of food products

What is What is the minimum turnover for an FSSAI license?the turnover limit for a proprietorship?

  • Basic FSSAI Registration: Turnover up to ₹12 lakh/year
  • State License: Turnover between ₹12 lakh and ₹20 crore/year
  • Central License: Turnover above ₹20 crore/year or operating in multiple states

Is an FSSAI license mandatory for small businesses?

Yes. Even small food businesses, such as home kitchens, hawkers, and petty retailers, must obtain Basic FSSAI Registration. It's a legal requirement under the FSS Act, 2006, to ensure food safety.

What is the fee for an FSSAI license for 5 years?

Fees depend on the type of license:

  • Basic Registration: ₹100/year
  • State License: ₹2,000 to ₹5,000/year
  • Central License: ₹7,500/year

Is an FSSAI license mandatory for a home kitchen?

Yes, if you are preparing food at home for commercial sale (e.g., home tiffin services, catering), you must register with FSSAI under Basic Registration.

How can I check if my FSSAI license is real or fake?

Yes, if you are preparing food at home for commercial sale (e.g., home tiffin services, catering), you must register with FSSAI under Basic Registration.

  • Visit the FSSAI License Check Portal
  • Enter your FSSAI License or Registration Number to verify details like:
    • Business name
    • Validity
    • Type of license
    • Status (Active/Expired)

Akash Goel

Akash Goel is an experienced Company Secretary specializing in startup compliance and advisory across India. He has worked with numerous early and growth-stage startups, supporting them through critical funding rounds involving top VCs like Matrix Partners, India Quotient, Shunwei, KStart, VH Capital, SAIF Partners, and Pravega Ventures.

His expertise spans Secretarial compliance, IPR, FEMA, valuation, and due diligence, helping founders understand how startups operate and the complexities of legal regulations.

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Pradhan Mantri Mudra Yojana (PMMY) for Startups | Razorpay Rize

Pradhan Mantri Mudra Yojana (PMMY) for Startups | Razorpay Rize

The PMMY scheme launched in 2015 aims to provide MUDRA Loans to small and micro enterprises through various commercial banks, RRBs, SFBs, NBFCs, and Cooperative Banks.

Description Who is it for? Benefits
To loan funds in the form of MUDRA for promoting MSMEs For small-scale businesses & MSMEs Business loans ranging from Rs.50,000 to Rs.10 lakh can be applied under this scheme, which is divided into three categories: Sishu, Kishor, and Tarun.

The loan range may vary depending on growth, development, and funding needs. The MUDRA loan can be categorized into

  • Sishu - Up to Rs. 50,000
  • Kishore - Rs. 50,000 to 5 Lakh
  • Tarun - Rs. 5 Lakh to 10 Lakh
The essentials of US Incorporations - documents, eligibility and process.

Table of Contents

Eligibility

  • Must have business plans for service sector activities or trading or manufacturing activities.
  • In the case of an individual applicant, the age range must be between 18 and 65 years.
  • Must be a non-corporate and non-farm small and micro-enterprise.

Documents Required for the PMMY Scheme

  • Proof of identity
    Self-attested copy of Voter's ID card/Driving Licence/PAN Card/AadhaarCard/Passport/Photo IDs issued by Govt. authority etc.
  • Proof of Residence
    Recent telephone bill/electricity bill/property tax receipt (not older than 2 months) / Voter's ID card / Aadhaar Card / Passport of Individual / Proprietor/Partners/Bank passbook or latest account statement duly attested by Bank officials/Domicile certificate/certificate issued by Govt. authority/Local panchayat/Municipality etc.
  • Applicant's Recent Photograph (2 copies) 6 months or older.
  • Proof of Identity/Address of the Business
    Copies of relevant licenses/registration certificates/other documents pertaining to the ownership, identity, and address of the business unit, if any

Other relevant documents, like proof of category, quotation, etc., are also required during the application process.

Application procedure

If you are eligible, applying for a MUDRA loan is relatively easy and can be done both online & offline.

Online

  • Visit the official website of the PMMY-authorized financial institution from which you wish to avail of the Mudra loan.
  • Download the relevant form depending on the type of loan (Sishu, Kishore, and Tarun).
  • Fill out all the personal and business details and then “Submit” the form.
  • Once received, the application form is verified and processed accordingly. Following the verification, the loan amount is approved and disbursed.
  • The loan amount can be withdrawn with the help of a MUDRA card issued after the loan approval.
Application procedure

Offline

  • Visit a PMMY-authorized bank or NBFC of your choice.
  • Fill out the MUDRA loan application form with the required details.
  • Submit the application form with a self-written business plan and other documents to substantiate those details.
  • After successful document verification, the loan will get approved, and the desired amount will be credited.
  • Must have the required infrastructure and targeted acceleration programs.

Benefits of the PMMY Scheme

  • MUDRA loans can be taken for small amounts at affordable interest rates; also, the credit guarantee is borne by the Government.
  • This scheme could be availed without any collateral or security.
  • The Mudra loan scheme in collaboration with the “Make In India” campaign, helps in fostering innovation, facilitating investment, and improving skill development.
  • Women Borrowers can avail this scheme with discounted interest rates.
  • Relief of up to 1500 Crore will be provided to the Borrowers as Interest Subsidy under the Mudra Shishu Category.

Achievements Under PMMY Scheme

Here’s a table to highlight the achievements under the PMMY scheme in the last 3 years.

No. of PMMY loans sanctioned Amount sanctioned
FY 23–24 66777013 INR 541012.86 Crores
FY 22–23 62310598 INR 456537.98 Crores
FY 21–22 53795526 INR 339110.35 Crores

Frequently Asked Questions

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Register your Limited Liability Partnership in just 1,499 + Govt. Fee

Register your business

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

Who is eligible to apply for the PMMY Scheme?

Individuals, including entrepreneurs, micro-enterprises, and small businesses in the non-corporate, non-farm sector, are eligible to apply for loans under the PMMY Scheme.

Is there any collateral required for loans under the PMMY Scheme?

Loans under the PMMY Scheme are collateral-free, meaning borrowers do not need to provide any security or collateral to avail of the loans, making them accessible to a wider segment of the population.

Can existing businesses apply for loans under the PMMY Scheme, or is it only for new startups?

The PMMY Scheme is open to both existing businesses and new startups. As long as the business falls under the micro-enterprise or small business category and meets the eligibility criteria, it can apply for a loan under the scheme.

What is the role of the Micro Units Development and Refinance Agency (MUDRA) in implementing the PMMY Scheme?

The Micro Units Development and Refinance Agency (MUDRA) acts as the nodal agency for the implementation of the PMMY Scheme. It works in collaboration with various financial institutions to ensure the effective disbursal of loans and monitoring of the scheme's progress.

Filing LLP Form 24: How to Close Your LLP in India

Filing LLP Form 24: How to Close Your LLP in India

A Limited Liability Partnership (LLP) combines the benefits of a partnership and a company, making it an attractive choice for entrepreneurs. It offers key advantages such as:

  • Separate Legal Entity: An LLP has its own legal identity, distinct from its partners.
  • Limited Liability: The liability of partners is limited to their agreed contribution.
  • Tax Benefits: LLPs enjoy certain tax advantages compared to companies.

Despite these benefits, there may come a time when an LLP needs to be closed. This blog explains the step-by-step process of LLP closure.

Table of Contents

Closure of LLP - Overview

The Limited Liability Partnership (LLP) closure process is a significant decision that can arise from various circumstances. Whether driven by voluntary factors, such as a mutual decision by the partners to discontinue operations, or involuntary factors, like non-compliance with statutory requirements, understanding the reasons and methods of closure is crucial.

The decision to close an LLP often stems from the following reasons:

  1. Voluntary Closure:
    Partners may mutually agree to cease operations due to business inactivity, an unprofitable venture, or a strategic shift in focus. This proactive decision is usually taken when all stakeholders conclude that continuing operations no longer align with their goals.
  2. Involuntary Closure:
    Sometimes, an LLP faces closure due to external circumstances such as non-compliance with legal or regulatory obligations, accumulation of penalties, or other statutory violations. In such cases, authorities may initiate the process of striking off the LLP from the official records.

Method or Procedure of Closing an LLP

Closing a Limited Liability Partnership (LLP) in India can be carried out through two primary methods: Voluntary Winding Up and Striking Off. Each method has its unique set of requirements, advantages, and limitations. Choosing the right approach depends on the LLP’s operational and financial status. Let’s look into the details of these two LLP closing procedures:

1. Voluntary Winding Up

Voluntary winding up is a process initiated by the partners when they collectively decide to dissolve the LLP. This method is typically chosen when the partners agree to cease operations due to inactivity, unprofitability, or a strategic decision to exit.

Advantages of Voluntary Winding Up:

  • Controlled and Planned Process
  • Avoids Penalties for Non-Compliance

Disadvantages of Voluntary Winding Up:

  • Time-Consuming
  • Settlement of Liabilities Required

2. Striking Off

Striking off is a simpler and faster method for closing an LLP. It is suitable for LLPs that have been inactive for a significant period and have no outstanding liabilities. This process involves applying to the RoC to remove the LLP’s name from the register.

Advantages of Striking Off:

  • Simplified and Less Expensive
  • Suitable for Dormant LLPs

Disadvantages of Striking Off:

  • Not Applicable for LLPs with Liabilities
  • Limited Scope for Active LLPs

Step-by-Step Procedure to Close an LLP

A brief overview of the process for closure of LLP in India:

1. Passing a Resolution for Winding Up

The first step is for the partners to pass a resolution for voluntary winding up. A majority of partners must agree, and the resolution must be filed with the ROC within 30 days.

2. Appointing a Liquidator

The partners must appoint a liquidator to oversee the winding-up process. The liquidator’s role includes realising the LLP’s assets and settling its liabilities.

3. Realising Assets and Paying Off Liabilities

The liquidator identifies and sells the LLP’s assets to clear all outstanding liabilities. Surplus funds, if any, are distributed among the partners.

4. Filing the Necessary Forms with the ROC

The LLP must file forms such as Form 24 and other requisite filings with the ROC to notify the authorities about the closure.

5. Obtaining the Final Order of Dissolution

After reviewing all filings and confirming the settlement of liabilities, the ROC issues a final order of dissolution, formally closing the LLP.

Filing LLP Form 24: Step-by-Step Process

Closing a Limited Liability Partnership (LLP) in India requires filing LLP Form 24 with the Ministry of Corporate Affairs (MCA). Below is a simplified step-by-step process to help you navigate this procedure:

1. Cease Business Operations

Before applying for closure, ensure that the LLP has either never commenced business or has stopped all commercial activities. If your LLP is still active, suspend all operations before proceeding.

2. Settle Liabilities and Close Bank Accounts

LLP Form 24 can only be filed if the LLP has no outstanding creditors and all bank accounts are closed. Obtain a closure letter from the bank as proof.

3. Draft Partner Affidavits

All designated partners must prepare an affidavit declaring:

  • The LLP has ceased operations from a specific date or never started.
  • The LLP has no liabilities, and partners agree to indemnify any future claims.

4. Prepare Supporting Documents

Attach the following documents to LLP Form 24:

  • Copy of the latest Income Tax Return (if filed). If no returns were filed, this is not required for non-operational LLPs.
  • A statement of accounts showing nil assets and liabilities, certified by a Chartered Accountant, dated no more than 30 days before filing.

5. Resolve Pending Filings

Ensure that:

  • The LLP Agreement is filed, if not already done.
  • Any overdue Form 8 and Form 11 are submitted up to the date of cessation of business.

6. File LLP Form 24 with MCA

Submit the completed LLP Form 24 with all attachments to the MCA. Once reviewed, a notice of striking off will be published on the MCA website if no objections are raised.

Documents Required to Close the LLP

Here is a list of LLP closure documents required during the process:

  • Board Resolution for Winding Up: Document signed by all partners approving the winding-up process.
  • Liquidator’s Consent: Written consent from the appointed liquidator.
  • No-Objection Certificate from Creditors: If applicable, creditors must provide a no-objection certificate.
  • Final Accounts and Balance Sheet: Statement of accounts showing all liabilities cleared.
  • Tax Clearance Certificates: Certificate from the tax authorities confirming no pending dues.

 Conditions for LLP Closure

Certain conditions must be met before initiating the LLP closure process:

  • Settlement of Debts and Liabilities: All outstanding debts and liabilities must be cleared.
  • Statutory Filings: All statutory filings and compliance requirements must be up-to-date.
  • Approvals: Necessary approvals from all partners and creditors (if applicable) must be obtained.

Advantages and Disadvantages of LLP

Like any business entity, an LLP has its own advantages and disadvantages that should be carefully considered before choosing this structure.

Advantages of an LLP

  1. Limited Liability: The liability of partners is limited to their agreed contribution to the business, protecting personal assets in case of business debts or losses.
  2. Separate Legal Entity: An LLP is a separate legal entity from its partners, meaning it can own assets, enter into contracts, and sue or be sued independently.
  3. Flexibility in Management: There is no strict separation between ownership and management, allowing partners to manage the business as per their agreement.
  4. No Minimum Capital Requirement: Unlike private limited companies, LLPs do not have a minimum capital requirement, making them more accessible to small businesses and startups.
  5. Ease of Compliance: LLPs have fewer compliance requirements compared to companies, such as no mandatory board meetings or annual general meetings.
  6. Unlimited Number of Partners: An LLP can have any number of partners, offering greater flexibility in expanding ownership.
  7. Low Registration Cost: Setting up an LLP is more affordable than incorporating a private limited company.

Disadvantages of an LLP

  1. Limited Recognition: LLPs are not as widely recognised as private limited companies, which may affect investor confidence or business collaborations.
  2. Restrictions on Fundraising: LLPs cannot raise funds through equity, making them less suitable for businesses looking to attract venture capital or private equity investment.
  3. Limited Scope for Public Trust: LLPs are not listed on stock exchanges, so they may lack the transparency that comes with publicly traded companies, leading to lower public trust.
  4. Difficulty in Expansion: LLPs are not ideal for businesses aiming for rapid scalability, as the inability to issue shares limits their access to growth capital.

An LLP is an excellent choice for small businesses, professionals, and startups looking for a flexible, cost-effective business structure with limited liability. However, it may not be suitable for companies that require significant funding or aspire to scale rapidly. 

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Frequently Asked Questions

How do I close my LLP account?

To close your LLP account, follow these steps:

  1. Settle liabilities
  2. Pass a resolution
  3. File necessary documents
  4. Notify creditors & obtain consent (if any)
  5. Get Registrar’s approval

What is the process of leaving an LLP?

If an individual partner wants to leave an LLP, the process is as follows:

  1. Review the LLP Agreement
  2. Notify Other Partners
  3. Execute a Deed of Retirement
  4. File Form 3 and Form 4
  5. Update Bank and Other Records

Can an LLP be restored after its winding up?

Yes, an LLP can be restored after it has been struck off, but only under specific circumstances. The process is:

  1. Apply to the National Company Law Tribunal (NCLT) for restoration within three years of the LLP being struck off.
  2. Provide valid reasons for seeking restoration, such as business resumption or wrongful closure.
  3. Ensure all pending annual returns, financial statements, and fees are filed with the RoC.
  4. If the tribunal is satisfied, it will issue an order to restore the LLP. The RoC will then update its records accordingly.

What complications of non-compliance you may need to face during the LLP winding-up process?

Non-compliance can lead to several challenges when winding up an LLP:

  1. Heavy penalties
  2. Legal issues
  3. Delay in the winding-up process
  4. Blacklisting & disqualification

How long does an LLP winding-up process take?

The duration of the winding-up process depends on the method and circumstances:

  • Voluntary Winding Up typically takes 4 to 6 months, depending on the completion of filings, approvals, and liability settlements.

Striking Off can be completed within 3 to 4 months if the LLP has no liabilities or pending compliance issues.

Nipun Jain

Nipun Jain is a seasoned startup leader with 13+ years of experience across zero-to-one journeys, leading enterprise sales, partnerships, and strategy at high-growth startups. He currently heads Razorpay Rize, where he's building India's most loved startup enablement program and launched Rize Incorporation to simplify company registration for founders.

Previously, he founded Natty Niños and scaled it before exiting in 2021, then led enterprise growth at Pickrr Technologies, contributing to its $200M acquisition by Shiprocket. A builder at heart, Nipun loves numbers, stories and simplifying complex processes.

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