An LLP has to get its accounts audited every year unless its figures fall within two limits in Rule 24(8) of the LLP Rules, 2009: turnover of up to forty lakh rupees in the financial year, or partners’ contribution of up to twenty-five lakh rupees. If the LLP is within the limits, the partners can skip the audit, but they still keep books and still file Form 8 with a partners’ statement in place of an audit report.
The tricky part is the word “or”. This post sets out the rule, the two ways people read it, and what the partners have to do in each case. If you would rather have the yearly LLP filings handled, our LLP annual compliance service prepares and files Form 8 and Form 11 for you.
What Rule 24(8) actually says
The main rule is short: the accounts of every limited liability partnership are to be audited in line with the Rules. Three provisos follow it.
- The exemption. An LLP whose turnover in a financial year does not exceed forty lakh rupees, or whose contribution does not exceed twenty-five lakh rupees, is not required to get its accounts audited.
- Voluntary audit. If the partners of an exempt LLP decide to have the accounts audited anyway, that audit has to follow the Rules.
- The statement instead of an audit. Where an exempt LLP does not opt for an audit, the Statement of Account and Solvency must carry a statement by the partners acknowledging their responsibility for keeping books of account, and the certificate set out in Form 8.
The rule sits under section 34 of the Limited Liability Partnership Act, 2008, which requires every LLP to keep proper books of account and to have its accounts audited as the Rules prescribe, and lets the Central Government exempt classes of LLPs by notification.
The two figures that decide it
Turnover
Turnover is the LLP’s gross revenue from selling goods or supplying services in the financial year. It is a yearly figure, so the test is applied afresh every year: an LLP that was exempt last year can need an audit this year.
Contribution
Contribution is what the partners have brought into the LLP, in money, property or other benefit, as recorded under the LLP agreement. Unlike turnover, it does not reset each year. It stays where it is until partners bring in more or take some out.
How the “or” is read
Because the exemption is worded “turnover does not exceed … or contribution does not exceed …”, two readings circulate, and the result differs only when one figure is above its limit and the other is below.
| Turnover in the year | Contribution | Audit? |
|---|---|---|
| Up to Rs 40 lakh | Up to Rs 25 lakh | Not required (within both limits) |
| Above Rs 40 lakh | Above Rs 25 lakh | Required (outside both limits) |
| Above Rs 40 lakh | Up to Rs 25 lakh | Depends on the reading |
| Up to Rs 40 lakh | Above Rs 25 lakh | Depends on the reading |
- Literal reading. The proviso is satisfied if either condition holds, so an LLP is exempt unless both figures are above their limits.
- Cautious reading. Many LLPs treat crossing either limit as the point at which an audit becomes necessary.
If your LLP is in one of the two middle rows, decide the position with the professional who signs your Form 8, and record the basis for the decision. A voluntary audit is always allowed under the second proviso, so the cautious route carries no legal risk.
If the LLP is exempt
An exemption removes the audit, not the paperwork. The partners still:
- keep proper books of account under section 34 of the Act;
- prepare the Statement of Account and Solvency for the year;
- include the partners’ statement and the certificate required by Form 8 in place of an auditor’s report;
- file Form 8 and the annual return in Form 11 with the Registrar.
Designated partners sign these filings, so the partners carry the responsibility for the figures. That is the point of the acknowledgement the third proviso asks for.
If the LLP needs an audit
The accounts are audited by the LLP’s auditor, and the audited figures go into Form 8. Rule 24 also deals with who appoints the auditor and when; read those sub-rules, or ask your auditor, before the year end so the appointment is in place in time.
Plan for the audit early in a year when turnover is growing. The turnover test looks at the whole financial year, so an LLP can move from exempt to audited partway through without any single event to mark it.
Not the same as a tax audit
The LLP Rules audit is a company-law style audit of the accounts. A tax audit under income-tax law is a separate requirement with its own thresholds under the Income-tax Act, 2025. An LLP can be exempt from one and still need the other, so check both every year.
Frequently asked questions
Does a newly registered LLP need an audit in its first year?
The same test applies. Look at the turnover for that first financial year and at the contribution recorded in the LLP agreement.
Can an exempt LLP choose to be audited?
Yes. The second proviso allows it, and the audit then has to follow the LLP Rules. Banks and investors sometimes ask for audited accounts even when the law does not.
Does the exemption change the Form 8 filing?
Form 8 is still filed. The difference is that it carries the partners’ statement and certificate instead of audited figures.
Complianto (complianto.in), operated by Mentorcorp Private Limited, is a private consultancy and is not affiliated with any government body. We do not issue official documents. We charge a professional fee for application assistance and advisory services. Applicants can apply directly to the government without our fees via the official portals: MCA (mca.gov.in), Income Tax (incometax.gov.in), GST (gst.gov.in), MSME (udyamregistration.gov.in), FSSAI (foscos.fssai.gov.in), Startup India (startupindia.gov.in), and IP India (ipindia.gov.in).
This article is general information, not legal or tax advice.
