Limited Liability Partnership (LLP)

A Limited Liability Partnership (LLP) is a form of business entity that combines the flexibility of a traditional partnership with the limited liability features of a company. In an LLP, each partner’s liability is restricted to their agreed contribution, which protects their personal assets from business debts and obligations. The LLP operates as a separate legal entity, capable of owning property, entering into contracts, and being held accountable in its own name.

Assessment Year (AY) and Financial Year (FY) Connection

The Financial Year (FY) refers to the 12-month period during which the LLP earns its income — typically from April 1 to March 31.

The Assessment Year (AY) is the year immediately following the FY, during which the income earned in the preceding FY is evaluated, assessed, and taxed by the Income Tax Department.

Example: If an LLP earns income during FY 2022–23 (April 1, 2022 – March 31, 2023), that income will be assessed and taxed in AY 2023–24 (April 1, 2023 – March 31, 2024).