Govt should provide clarity on LLPs: Assocham

NEW DELHI: The government should provide more clarity on the recently introduced Limited Liability Partnerships, especially on taxation, so that companies would be encouraged to convert into such business firms, industry chamber Assocham said.

The Limited Liability Partnerships (LLPs) is a hybrid of partnership firms and companies. It is a separate legal entity and the partners have the advantage of being liable to the extent of their shareholding in the entity.

"Since LLP will become a very popular vehicle of carrying out various business activities in the country, all aspects of taxation measures dealing with either incorporation or conversion of existing entities into LLP's needs to be addressed fully by the Finance Ministry," Assocham said.

The chamber said, "absence of certain taxation provisions will only delay the formation and conversion of LLPs and thus growth of business activities."

It is not clear if lakhs of partnership firms after converting into LLPs would be allowed to carry forward their minimum alternate tax refund and other liquidation benefits, Assocham said, addding the Finance Act, 2009-10, is yet to correct certain anomalies as regards the LLPs.