Convert a Partnership Firm to LLP: Process & Forms

A partnership firm converts into an LLP under Section 55 and the Second Schedule of the LLP Act, 2008 by filing Form 17 together with the FiLLiP incorporation form on the MCA portal, with every partner of the firm, and no one else, becoming a partner of the LLP. Once the Registrar registers the conversion, the firm's assets, liabilities, contracts and pending cases move to the LLP and the firm is deemed dissolved.

This guide covers who can convert, the forms and time limits, what happens to property, contracts, licences, GST and PAN, how the tax position should be approached, the documents, a timeline and cost table, a worked example and the reasons Form 17 is sent back.

Why firms convert

In a partnership firm, partners are personally liable, jointly and severally, for all the firm's debts. An LLP is a body corporate with perpetual succession, and partners' liability for the LLP's future obligations is limited, except in cases such as fraud. An LLP can own property and sue in its own name, and its compliance is lighter than a company's: Form 11 by 30 May, Form 8 by 30 October and an audit only if turnover exceeds ₹40 lakh and contribution exceeds ₹25 lakh.

Conversion lets the business continue, with its history, customers and contracts, instead of closing the firm and starting a new LLP from scratch. The trade-off is that old debts do not disappear: partners stay personally liable for what the firm owed before conversion. If the firm has little history worth keeping, a fresh LLP registration may be simpler.

Who can convert: the conditions

Any firm under the Indian Partnership Act, 1932 can apply, whether or not it is registered with the Registrar of Firms. The Second Schedule sets one hard rule: a firm may convert only if the partners of the LLP are all the partners of the firm and no one else. Everything else follows from that.

Forms and time limits

FiLLiP also allots the LLP's LLPIN, PAN and TAN. If the MCA sends the application back for re-submission, MCA's LLP e-filing guidance says the fee does not have to be paid again on re-applying for conversion.

Step-by-step conversion process

• Step 1 — Plan. Confirm every partner will join, list secured creditors, licences and pending cases, fix the contribution of each partner and choose at least two designated partners, one of whom is resident in India.
• Step 2 — DSCs and name. Obtain DSCs for the designated partners. Reserve the LLP name inside FiLLiP or earlier through RUN-LLP. The name usually keeps the firm's identity with "LLP" at the end.
• Step 3 — Close the books on the conversion date. A practising CA certifies the statement of assets and liabilities as at that date. It must agree with the firm's books.
• Step 4 — Consents. Every partner signs consent to the conversion. Secured creditors give written consent. Collect any regulatory approval the firm's licence requires.
• Step 5 — File FiLLiP with Form 17. Select conversion of a firm into an LLP in FiLLiP and link Form 17, attaching the consents, the certified statement, the firm's latest income-tax return acknowledgement and details of pending proceedings. Form 17 is certified by a practising professional.
• Step 6 — Registration. The Registrar registers the conversion and issues the certificate of registration. From that date the firm's business vests in the LLP.
• Step 7 — Inform the Registrar of Firms. Within 15 days, submit Form 14 to the Registrar of Firms with whom the firm was registered, so the firm is removed from the state register. In West Bengal this is the Registrar of Firms, Societies and Non-Trading Corporations; see our Registrar of Firms West Bengal guide.
• Step 8 — LLP agreement and transition. Stamp and file the LLP agreement in Form 3 within 30 days, then update bank, GST, licences, property records, letterheads and the website.

Our partnership to LLP conversion service handles Steps 1 to 6 from ₹8,499 for a firm with up to three partners, with Form 14, Form 3 and the GST transition available in the Complete package.

What happens to assets, contracts and licences

Paragraph 7 of the Second Schedule is the core of the conversion. On the date of registration:

• Assets and liabilities: all property, rights, privileges, liabilities and obligations of the firm, and the whole undertaking, transfer to and vest in the LLP.
• The firm: is deemed dissolved and, if registered, is removed from the Registrar of Firms' records.
• Registered property: where property is registered with an authority, such as land records or a vehicle registration office, the LLP must notify that authority of the conversion as soon as practicable.
• Pending proceedings: cases by or against the firm continue by or against the LLP.
• Contracts, agreements and employees: continue with the LLP as if it had been the original party or employer.
• Licences and approvals: issued to the firm under other laws move to the LLP, subject to the provisions of the law under which they were issued.
• Old debts: partners remain personally liable, jointly and severally with the LLP, for liabilities and obligations the firm incurred before conversion.

Stamp duty on any transfer is a state subject. The LLP Act has no stamp-duty provision of its own, so the position depends on the state's Stamp Act and on how the relevant registry treats the conversion.

GST, PAN, TAN and bank account

• PAN and TAN: the LLP gets a new PAN and TAN through FiLLiP. The firm files its own income-tax return for the period up to the conversion date; TDS deducted by the firm stays under the firm's TAN.
• GST: GST registration is PAN-based, so the LLP generally takes its own GST registration. The transfer of the business and of unutilised input tax credit is reported through the GST portal, and the firm's registration is then cancelled. Plan the cut-over date so invoices are raised in the right GSTIN.
• Bank account: the bank closes or re-titles the firm's account and opens one in the LLP's name. Loans need the bank's consent before filing, and the sanction is usually re-documented in the LLP's name.
• Other registrations: Udyam, shop and establishment, trade licence, IEC and professional tax need updating in the LLP's name. Some can be amended; some need a fresh application.

The income-tax position

An LLP is taxed in the same way as a firm, so the rate does not change. Whether the transfer of the firm's assets to the LLP creates a capital-gains or other tax charge is a separate question, and the LLP Act does not answer it. The answer depends on the facts: whether assets are revalued before conversion, whether the profit-sharing ratio or capital accounts change, and whether any partner receives money or assets on the way. Treat any blanket claim that conversion is "tax-free" with caution. We review the income-tax position with you before filing, so the books and the statement of assets and liabilities are prepared on a basis you can defend.

Documents checklist

• Partnership deed with all amendments
• Registration certificate of the firm from the Registrar of Firms, if registered
• PAN of the firm and latest income-tax return acknowledgement
• Statement of assets and liabilities, certified by a practising CA
• Consent of all partners to the conversion
• List of secured creditors with their consent, where applicable
• PAN, Aadhaar, photo and address proof of each partner
• Registered office proof (utility bill) and the owner's NOC or rent agreement
• Approvals from any regulator, where the firm's licence requires it
• Details of pending proceedings by or against the firm

Timeline and cost

Resubmissions, secured-creditor consents and regulatory approvals add time. Larger firms, firms with secured loans or licences that need fresh approval, and transfers of immovable property records are quoted on scope.

Worked example: a three-partner Kolkata trading firm

A Kolkata trading firm has three partners, partners' capital of ₹18 lakh, a ₹25 lakh hypothecation loan from a bank and a GST registration. It wants limited liability before taking on a large supply contract.

• Week 1: DSCs for two designated partners; the CA certifies the statement of assets and liabilities as at the conversion date; the bank's consent letter is requested.
• Week 2: FiLLiP is filed with Form 17 linked, showing total contribution of ₹18 lakh, not more than the firm's capital, with the bank's consent attached.
• Weeks 3–4: the certificate of registration is issued; Form 14 reaches the Registrar of Firms within 15 days.
• Within 30 days: the LLP agreement is stamped and filed in Form 3; the LLP takes its own GST registration and the firm's is cancelled after the transfer; the bank moves the loan and account to the LLP.
• Next 12 months: invoices and letterheads carry "formerly [firm name], converted into an LLP" with the firm's registration number.
• Liability: the partners remain personally liable for the firm's old dues, including the existing bank loan, alongside the LLP. The new supply contract is the LLP's alone.

Common reasons Form 17 is sent back

• LLP partners do not match the partners in the deed or its latest amendment
• Statement of assets and liabilities not certified by a practising CA, or not matching the books
• LLP contribution higher than the firm's capital in the statement
• One partner's consent missing or unsigned
• Secured loans in the books but no list or consent of secured creditors
• Registered office in FiLLiP differs from the firm's principal place without explanation
• Pending litigation or notices not disclosed
• Proposed name too close to an existing company or LLP

After conversion, plan the first Form 3, Form 11 and Form 8 from the start: LLP late fees are multiples of the normal fee. Our LLP annual compliance guide sets out the yearly calendar.

Frequently asked questions