Tax Savings under LLP STRUCTURE as compared with SOLE PROPRIETORSHIP (When the Annual Net Profit is upto

Rs. 25 Lac)

Rs. 1,19,000 Savings

SOLE PROPRIETORSHIP FIRM
Income Slabs Total Tax outlay from Proprietor Net Profit Slabs

LIMITED LIABILITY PARTNERSHIP (LLP)

Taxation Slabs 10 % Taxed in the hands of LLP Rs. 3 Lac 31% on Rs. 30,000 = Rs. 2,70,000 is distributed among the Partners If equal distribution among Partners: Rs. 1.35 Lac each 40 % Taxed in the hands of LLP Rs. 22 Lac 60 % Distributed to Partners as Remuneration 31% on Rs. 8,80,000 = Rs. 13,20,000 is distributed among the Partners= Rs. 6,60,000 each Hence total remuneration paid to each Partner is Rs. 7,95,000 (1.35 lac+ 660K) Each Partner to pay tax on Rs. 7,95,000 -Upto Rs. 1.9 lac = Nil -On 3.1 lac = Rs. 31,000 - On 2.95 lac = Rs. 59,000 Rs. 2,72,800 Total Tax outlay from the LLP & Partners Rs. 9,200

Upto- Rs. 1,90,000

Nil Rs. 31,000 (10% on Rs. 3.1 lac) Rs. 1,00,000 (20% on Rs. 5 lac) Rs. 4,50,000 (30% on Rs. 15 lac)

90 % Distributed to Partners as Remuneration

Rs. 1.9 Lac to 5 Lac

Rs. 5 Lac to Rs. 10 Lac

Rs. 10 Lac to Rs. 25 Lac

Rs. 1,80,000
(Rs. 90,000 each)

Rs. 5,81,000

Rs. 4,62,000
(If one of the partner is Female/Senior citizen tax will be less than Rs. 4,40,000

TOTAL SAVING UNDER THE LLP MODEL IS Rs. 1,19,000/Rs. 1,41,000

(Rs. 5,81,000 Rs. 4,62,000= Rs. 1,19,000)

Tax Savings under LLP STRUCTURE as compared with PRIVATE/PUBLIC LIMITED COMPANY (When the Annual Net Profit is upto Rs. 25 Lac)

Rs. 6,24,000 Savings

PRIVATE LIMITED COMPANY
Net Profit Income Tax = Total Tax outlay from Company Rs.8,25,000 (33% on Rs. 25 Lac) (Net Profit available for distribution as Dividend= Rs. 16.75 Lac) 40 % Taxed in the hands of LLP Rs. 22 Lac 60 % Distributed to Partners as Remuneration Dividend Distribution = Tax 2,68,000 (16% on Rs. 16.75 Lac) Rs. 3 Lac Net Profit Slabs

LIMITED LIABILITY PARTNERSHIP (LLP)

Taxation Slabs 10 % Taxed in the hands of LLP 90 % Distributed to Partners as Remuneration 31% on Rs. 30,000 = Rs. 2,70,000 is distributed among the Partners If equal distribution among Partners: Rs. 1.35 Lac each 31% on Rs. 8,80,000 = Rs. 13,20,000 is distributed among the Partners= Rs. 6,60,000 each Hence total remuneration paid to each Partner is Rs. 7,95,000 (1.35 lac+ 660K) Each Partner to pay tax on Rs. 7,95,000 -Upto Rs. 1.6 lac = Nil -On 3.4 lac = Rs. 34 k - On 2.95 lac = Rs. 59 k Rs. 2,72,800 Total Tax outlay from the LLP & Partners Rs. 9,300

Rs. 1,86,000
(Rs. 93,000 each)

Rs. 10,93,000

Rs. 4,68,000
(If one of the partner is Female/Senior citizen tax will be less than Rs. 4,60,000

TOTAL SAVING UNDER THE LLP MODEL IS Rs. 6,24,000/Rs. 6,40,000

(Rs. 10,93,000 Rs. 4,68,000= Rs. 6,24,000)
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