Although the Limited Liability Partnership Act came into effect on April 1, 2009, it appears that only about 38 limited liability partnerships (LLPs) have registered themselves under this new legislation. One of the key shortcomings of the existing regime is the lack of clarity on taxation of LLPs as the Income Tax Act does not deal with such a business entity. Although it was earlier expected that the position regarding taxation of LLPs will be clarified in the forthcoming Budget session of Parliament, a recent media report suggests that the issue will be postponed to next year’s Budget. This does not augur well for LLPs as they are likely to utilised as a business vehicle only when the tax regime is clear, which may have to await another year.
