The Limited Liability Partnership Act, 300067was enacted by the Parliament of India to introduce and legally sanction the concept of Limited Liability Partnership in India. Unlike the general parterships in India, LLPs have Perpetual succession and it has a legal existence of its own i.e., in case of LLP becoming insolvent partners do not have any unlimited liability for the debts of LLP.
As per the Finance Bill, 2009, the income of an LLP is taxed only the hands of LLP and not the Partners. The entire taxation of LLPs is similar to the existing taxation pattern applicable to Partnerships registered and formed under The Indian Partnership Act, 1932.Dividend distribution tax is not applicable in case of LLPs, whereas it is 15.00%(plus surcharge @ 5% plus education cess @ 2% plus SHES @ 1% of amount so declared, distributed or paid) in case of companies. Wealth Tax (which is currently @ 1%) is not applicable to LLPs.