# Convert Partnership Firm to LLP

> A partnership firm converts into an LLP by filing Form 17 along with FiLLiP under Section 55 and the Second Schedule of the LLP Act, 2008. All partners of the firm must become partners of the LLP and no one else. On registration, the firm's property, liabilities, contracts and proceedings vest in the LLP and the firm is treated as dissolved, with intimation to the Registrar of Firms.

Practice: Conversions, Changes & Closure — https://www.industax.com/services/business-changes/

The Income-tax Act has no specific section exempting a firm-to-LLP conversion, but where the same partners continue in the same profit-sharing ratio and no consideration is paid, the conversion is widely treated as not involving a transfer. We document it to support that position and review carried-forward losses and depreciation separately.

After registration, the firm's GST registration is replaced by the LLP's (with ITC-02 for credit transfer), and bank accounts, licences, property records and contracts are updated. The firm's last return covers the period up to the conversion date.

## Key facts

| Item | Detail |
| --- | --- |
| Law | Section 55 and Second Schedule, LLP Act 2008 |
| Forms | Form 17 + FiLLiP |
| Partners | All firm partners, and only they, become LLP partners |
| Effect | Assets, liabilities and contracts vest in the LLP |
| GST | New GSTIN; credit moved via ITC-02 |

## Who needs this

- Firms wanting limited liability without company-level compliance
- Professional and family firms
- Firms planning to admit new partners with liability protection

## What's included

- Name reservation and LLP agreement
- Form 17 and FiLLiP filing
- Intimation to Registrar of Firms
- GST, bank and licence migration

## Documents

- Partnership deed and firm registration certificate
- Statement of assets and liabilities certified by a CA
- Consent of all partners
- No-objection from secured creditors where applicable

## Process

1. **Prepare** — Name, LLP agreement and creditor consents ready.
2. **File** — Form 17 with FiLLiP; certificate issued.
3. **Close** — Firm dissolved in records; registrations moved.

## Also covers

- **Proprietorship to LLP** — Needs a business transfer and is not specifically tax-exempt.

## FAQs

### Can a new partner join at the time of conversion?

No. The LLP Act requires that all partners of the firm, and no one else, become partners of the LLP on conversion. A new partner can be admitted after conversion by filing Form 3 and Form 4.

### Does an LLP need an audit after conversion?

Only if its turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh, under Rule 24(8) of the LLP Rules. Below that, the accounts are certified by the designated partners. A tax audit applies separately if Income-tax thresholds are crossed.

### Will the LLP keep the firm's PAN?

No. The LLP gets a new PAN, and the firm files a final return up to the date of conversion.

## Official sources

- Ministry of Corporate Affairs — MCA21 portal: https://www.mca.gov.in/
- GST portal: https://www.gst.gov.in/

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Canonical page: https://www.industax.com/services/business-changes/partnership-to-llp-conversion
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.