# Convert Private Limited Company to LLP

> A private or unlisted public company can convert into an LLP by filing Form 18 with FiLLiP under Section 56 and the Third Schedule of the LLP Act, if all shareholders become partners and there is no security interest outstanding (or secured creditors consent). It is tax-free under Section 47(xiiib) only if the company's turnover didn't exceed ₹60 lakh and total assets didn't exceed ₹5 crore in any of the three preceding years, among other five-year conditions.

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

Companies convert to LLPs mainly to cut compliance cost — no board meetings or AGMs, no mandatory statutory audit below the LLP thresholds, and no dividend-style tax on distributing profits, since an LLP's share of profit is exempt in partners' hands.

The tax conditions are strict: all assets and liabilities pass to the LLP, all shareholders become partners in the same proportion, they receive no other consideration, they keep at least 50% of profit share for five years, and no accumulated profits are paid out for three years. If the size tests fail, we model the tax cost before deciding.

## Key facts

| Item | Detail |
| --- | --- |
| Law | Section 56 and Third Schedule, LLP Act 2008 |
| Forms | Form 18 + FiLLiP |
| Tax-free size test | Turnover ≤ ₹60 lakh and assets ≤ ₹5 crore in each of 3 preceding years |
| 5-year condition | Former shareholders keep ≥ 50% profit share |
| 3-year condition | No payout out of accumulated profits |

## Who needs this

- Small companies whose compliance cost outweighs the benefit
- Professional firms incorporated as companies
- Holding companies with limited activity

## What's included

- Eligibility and tax-condition analysis
- Creditor consents and board/shareholder approvals
- Form 18 and FiLLiP filing
- GST, bank and licence migration

## Documents

- Audited financial statements for 3 years
- Consent of all shareholders
- Consent of secured creditors
- Latest ITR and tax clearance details

## Process

1. **Test** — Eligibility and tax conditions checked.
2. **Convert** — Form 18 filed; certificate of registration issued.
3. **Settle** — Company deemed dissolved; LLP takes over.

## FAQs

### What if my company's turnover was above ₹60 lakh?

The conversion is still legally possible, but Section 47(xiiib) won't exempt it, so the transfer of assets can be taxed as capital gains in the company's hands. We calculate that cost first; sometimes it is small enough to proceed.

### Are a company's carried-forward losses available to the LLP?

Yes, under Section 72A(6A), if all the Section 47(xiiib) conditions are met. If a condition is later breached, the set-off already allowed becomes taxable in the year of breach.

### Can a company with pending ROC filings convert?

All overdue annual returns and financial statements should be filed first; the Registrar can refuse or query a conversion where filings are pending.

## Official sources

- Ministry of Corporate Affairs — MCA21 portal: https://www.mca.gov.in/
- Income Tax e-Filing portal: https://www.incometax.gov.in/

---
Canonical page: https://www.industax.com/services/business-changes/private-limited-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.