# Financial Disclosures by LLP [Sections 34 & 35]

Every LLP must comply with three pillars of financial disclosure:

## 1. Books of Accounts (BOA) — Section 34

Maintained at the registered office of the LLP
For the prescribed period
On cash basis OR accrual basis
Following the double entry system of accounting

## 2. Statement of Account & Solvency — Section 34

Prepared for each Financial Year (FY)
Within 6 months from end of FY
Signed by Designated Partners (DPs)
Filed with ROC every year within prescribed time

## 3. Annual Return — Section 35

Duly authenticated
Filed with ROC within 60 days of closure of FY

## 4. Audit

Accounts of LLP shall be audited
CG may exempt any class of LLP from audit requirement

## Financial Year — Definition

Situation	Financial Year
Normal case	1st April to 31st March
LLP incorporated on or after 1st October	May end on 31st March of the year next to the following year (i.e., first FY can be > 12 months)

## Penalties for Default

### Default in filing Statement of Account & Solvency OR Annual Return:

Person	Penalty
LLP	₹100 per day (Max ₹1,00,000)
Every DP	₹100 per day (Max ₹50,000)

### Default in preparing BOA / Statement of Account & Solvency / its Audit:

Person	Penalty
LLP	≥ ₹25,000, extendable up to ₹5,00,000
Every DP	≥ ₹10,000, extendable up to ₹1,00,000

Worked example

### Example 1

Q: PQR LLP was incorporated on 15th November 2025. When does its first financial year end?

A: Since PQR LLP was incorporated after 30th September (i.e., on or after 1st October), its FY may end on 31st March of the year next to the following year, i.e., 31st March 2027. So first FY = 15-Nov-2025 to 31-Mar-2027.

### Example 2

Q: XYZ LLP failed to file its Annual Return for FY 2024-25 with ROC. The default continued for 400 days. Compute the penalty for the LLP and each DP.

LLP: ₹100 × 400 = ₹40,000 (within cap of ₹1 lakh) → ₹40,000
Each DP: ₹100 × 400 = ₹40,000 (within cap of ₹50,000) → ₹40,000

If default had continued 1,200 days: LLP capped at ₹1,00,000 and each DP capped at ₹50,000.

### Example 3

Q: ABC LLP did not prepare its Statement of Account & Solvency for FY 2024-25. What penalty applies?

A: This is a default in preparation (not merely filing). So the higher slab applies — LLP: minimum ₹25,000 extendable to ₹5,00,000; every DP: minimum ₹10,000 extendable to ₹1,00,000.

⚠️ Common exam mistakes

Confusing the two penalty slabs — the higher slab applies to defaults in preparation of BOA/Statement, while the per-day slab applies to filing defaults.
Forgetting that LLP can follow EITHER cash OR accrual basis (not only accrual).
Stating Annual Return must be filed within 30 days — it is 60 days from closure of FY.
Stating Statement of Account & Solvency must be prepared within 60 days — it is 6 months from end of FY.
Assuming an LLP incorporated on 1st October itself can extend its FY — extension is for LLPs incorporated after 30th September (i.e., on or after 1st October).

Bare-Act text Sections 34 and 35 · The Limited Liability Partnership Act, 2008 · click to expand

Section 34 - Maintenance of books of account, other records and audit, etc.: LLP shall maintain proper books of accounts at registered office and shall prepare a Statement of Account and Solvency for each financial year, signed by the Designated Partners and filed with the Registrar. Accounts of LLP shall be audited as prescribed; CG may exempt any class of LLP. Section 35 - Annual return: Every LLP 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.

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Financial Disclosures — BOA, Statement of Account & Solvency, Annual Return

Worked example

⚠️ Common exam mistakes