Financial Disclosures: Books of Account, Statement of Account & Solvency, Accounting Standards and Annual Return (Sections 34, 34A, 35)
# Financial Disclosures by an LLP
Limited liability comes with a compliance price: financial transparency. Sections 34, 34A and 35 prescribe books of account, the Statement of Account & Solvency (SAS), accounting/auditing standards, and the annual return.
## 1. Books of Account (Section 34(1))
Every LLP must:
Maintain proper books of account as prescribed;
Relating to its affairs for each year of its existence;
Following the principles of accounting;
At its registered office.
### Audit
The accounts must be audited as per prescribed rules. The Central Government may, by notification in the Official Gazette, exempt any class of LLPs from audit requirements.
### Penalty for Default — Books of Account
Defaulter
Fine Range
LLP
₹25,000 to ₹5,00,000
Every Designated Partner
₹10,000 to ₹1,00,000
## 2. Statement of Account and Solvency (Section 34(2)-(3))
This is the annual financial statement of an LLP.
### Preparation
Within 6 months from the end of each financial year;
In prescribed form;
Signed by the designated partners.
### Filing with Registrar
Within prescribed time;
In prescribed form/manner with prescribed fees;
Every year.
### Penalty for Default — SAS
Defaulter
Penalty
LLP
₹100 per day of failure, max ₹1,00,000
Every Designated Partner
₹100 per day of failure, max ₹50,000
## 3. Accounting and Auditing Standards (Section 34A)
The Central Government may, in consultation with NFRA (Section 132, Companies Act 2013):
1. Prescribe standards of accounting; and
2. Prescribe standards of auditing as recommended by ICAI (Chartered Accountants Act, 1949),
for a class or classes of LLPs.
> NFRA + ICAI consultation injects company-grade financial reporting discipline into LLPs.
## 4. Annual Return (Section 35)
Every LLP must file an annual return, duly authenticated, with the Registrar:
Within 60 days of closure of its financial year;
In prescribed form, manner and fee.
### Penalty for Default — Annual Return
Defaulter
Penalty
LLP
₹100 per day of failure, max ₹1,00,000
Every Designated Partner
₹100 per day of failure, max ₹50,000
## 5. Comparison Table
Compliance
Section
Time Limit
Max LLP Penalty
Max DP Penalty
Books of Account
34(1)
Maintain continuously
₹5 lakh
₹1 lakh
Statement of Account & Solvency (prep)
34(2)
6 months from FY end
—
—
SAS Filing
34(3)
As prescribed
₹1 lakh
₹50,000
Annual Return
35
60 days from FY end
₹1 lakh
₹50,000
> Memory hook: "6 months to prepare SAS, 60 days to file Annual Return."
Worked example
### Example 1
Example 1 — SAS Preparation Deadline
ABC LLP's financial year ends on 31st March 2026. By when must its Statement of Account and Solvency be prepared?
Answer: Under Section 34(2), within 6 months from the end of the financial year, i.e., by 30th September 2026. It must be signed by the designated partners.
### Example 2
Example 2 — Annual Return Penalty Calculation
XYZ LLP closed its FY on 31st March 2026. The annual return was due by 30th May 2026 (60 days). It was actually filed on 29th August 2026 (91 days late).
Answer: Penalty under Section 35:
LLP: 91 × ₹100 = ₹9,100 (well below ₹1 lakh cap).
Every Designated Partner: 91 × ₹100 = ₹9,100 each (below ₹50,000 cap).
If the delay were, say, 1,200 days, the LLP penalty would cap at ₹1,00,000 and each DP at ₹50,000.
### Example 3
Example 3 — Standards of Accounting
Who prescribes accounting standards for LLPs?
Answer: Under Section 34A, the Central Government, in consultation with NFRA (constituted under Section 132 of the Companies Act, 2013), prescribes the accounting standards. Auditing standards are prescribed by the Central Government as recommended by ICAI (Section 3, Chartered Accountants Act, 1949).
⚠️ Common exam mistakes
Confusing the SAS preparation deadline (6 months) with the annual return deadline (60 days).
Forgetting that the daily penalty (₹100) is capped — at ₹1 lakh for the LLP and ₹50,000 per designated partner — for both SAS and annual return defaults.
Stating that books must be kept at any place — they must be at the registered office unless prescribed otherwise.
Believing that all LLPs must compulsorily get accounts audited — the Central Government may exempt certain classes by notification.
Confusing Section 34A consultation: accounting standards need NFRA consultation; auditing standards are based on ICAI recommendations.
Treating books of account fine (₹25k–₹5 lakh for LLP) as also a per-day fine — it is a one-time range, not daily.
Bare-Act text Sections 34, 34A, 35 · Limited Liability Partnership Act, 2008 · click to expand
Section 34 — Maintenance of books of account, other records and audit, etc.: (1) The limited liability partnership shall maintain such proper books of account as may be prescribed relating to its affairs for each year of its existence on cash basis or accrual basis and according to double entry system of accounting and shall maintain the same at its registered office for such period as may be prescribed. (2) Every limited liability partnership shall, within a period of six months from the end of each financial year, prepare a Statement of Account and Solvency for the said financial year as at the last day of the said financial year in such form as may be prescribed, and such statement shall be signed by the designated partners of the limited liability partnership. (3) Every limited liability partnership shall file within the prescribed time, the Statement of Account and Solvency prepared pursuant to sub-section (2) with the Registrar every year in such form and manner and accompanied by such fees as may be prescribed.
Section 34A — Accounting and auditing standards: The Central Government may, in consultation with the National Financial Reporting Authority constituted under section 132 of the Companies Act, 2013 — (a) prescribe the standards of accounting; and (b) prescribe the standards of auditing, as recommended by the Institute of Chartered Accountants of India constituted under section 3 of the Chartered Accountants Act, 1949, for a class or classes of limited liability partnerships.
Section 35 — Annual return: (1) Every limited liability partnership shall file an annual return duly authenticated with the Registrar within sixty days of closure of its financial year in such form and manner and accompanied by such fee as may be prescribed.