Centre to cut 50% fines for start-ups created as LLPs

The government is set to announce a 50% cut in penalties for nearly a dozen offenses by start-ups incorporated as limited liability partnerships (LLPs), an official aware of the development stated. The offenses include non-compliance relating to requirements of filing statutory documents and returns, appointing a designated partner responsible for all compliances, and having at least one resident partner for the LLP, the official cited above said on condition of anonymity.

The ministry of corporate affairs will notify the requirements for start-up LLPs to avail of this relief. One of them is that the start-up needs to be recognized as one by the department for promotion and internal trade (DPIIT), the person mentioned above said. Since these are procedural and technical lapses and do not show any intent to defraud the public, an in-house administrative system will be available to settle them.

DPIIT defines a start-up as a business with less than INR 100 crore sales, which should be working towards innovation and improvement of services and should have the potential to generate jobs. The amendment to the LLP Act passed by Parliament in the recently concluded monsoon session decriminalized offenses that are procedural as part of efforts to improve the ease of doing business.