A) Automatic transfer
All the assets and liabilities of the firm immediately before the conversion become the assets and liabilities of the LLP.
B) No Stamp Duty
All movable and immovable properties of the firm automatically vest in the LLP. No instrument of transfer is required to be executed and hence no stamp duty is required to be paid.
C) No Capital Gain Tax
No Capital Gains tax shall be charged on transfer of property from firm to LLP.
D) Continuation of Brand Value
The goodwill of the firm and its brand value is kept intact and continues to enjoy the previous success story with legal recognition.
E) Carry Forward and Set off Losses and Unabsorbed Depreciation
The accumulated loss and unabsorbed depreciation of firm is deemed to be loss/ depreciation of the successor LLP for the previous year in which conversion was effected. Thus such loss can be carried for further eight years in the hands of the successor LLP.
What Is Required..?
• On Conversion, all the partners of the partnership firm shall become partners of the LLP in the same proportion in which their capital accounts stood in the books of the Firm on the date of the conversion.
• Up to date filing of Income tax returns.
• Consent of all the unsecured creditors for the proposed conversion.
• The partners receive consideration only by way of allotment of shares in LLP.
• Minimum 2 Designated Partners.
• At least 1 of the designated partners shall be an Indian Resident.
• The Partners and Designated Partners can be same person.
• There is no concept of share capital, but there has to be some sort of contribution from each partner.
• DIN (Director Identification Number) for all the Designated Partners.
• DSC (Digital Signature Certificate) for any one of the Designated Partners.