What is the income tax rate for LLP?

Income Tax Rate for LLPs: What You Need to Know for FY 2025–26

For professionals and entrepreneurs running a Limited Liability Partnership (LLP), understanding tax obligations is crucial. As of the Financial Year 2025–26 (Assessment Year 2026–27), LLPs in India are subject to a flat 30% income tax rate on their total taxable income. This rate applies uniformly, regardless of turnover or profits, making taxation relatively straightforward for these entities.

However, the tax burden can increase for high-income LLPs. If the total income exceeds Rs. 1 crore, a 12% surcharge is levied on the tax amount. This is not a tax on income directly, but on the 30% tax itself, effectively raising the overall rate for large firms. Additionally, a 4% Health and Education Cess is applied on the sum of the tax and surcharge, further adjusting the final liability.

For example, an LLP earning Rs. 1.2 crore would pay 30% tax on profits, followed by a 12% surcharge on that tax, and then a 4% cess on the combined total. While LLPs enjoy certain legal and operational benefits, their tax structure doesn’t include the lower slab rates available to individuals or the special regimes for small businesses. Unlike companies, they are not eligible for presumptive taxation under Section 44AB unless they meet specific criteria.

It’s also important to note that LLPs must comply with audit requirements and filing deadlines, regardless of turnover. Proper planning and timely accounting can help manage the effective tax rate and avoid penalties. Given these rates and surcharges, LLPs should factor in all layers of taxation when projecting net income and planning distributions.