FEMA LLP-II Form – Reporting Transfer of Capital Contribution or Profit Share in LLPs

Q: What is Form LLP-II under FEMA?

FEMA form filed on FIRMS portal within 60 days of transfer/receipt of consideration for capital contribution transfers between resident and non-resident LLP partners — the LLP equivalent of FC-TRS.

Q: What are the FEMA pricing rules for LLP capital contribution transfers?

Resident to non-resident: transfer price must not be below FMV (certified by SEBI MB or CA). Non-resident to resident: transfer price must not exceed FMV. Both directions require arm's-length pricing.

Q: Can profit share in an LLP be transferred to a non-resident?

Yes. Transfer of profit share constitutes transfer of economic interest and must comply with FEMA pricing guidelines and LLP-II reporting requirements, same as capital contribution transfers.

Q: Is stamp duty payable on the transfer of LLP capital contribution?

Yes, subject to state-specific stamp duty laws. Treatment varies by state. We advise on applicable stamp duty and ensure the transfer instrument is properly stamped before registration.

Q: What happens if the LLP-II is filed late?

FEMA contravention with compounding liability. Fees based on capital contribution amount and delay period. Voluntary pre-notice compounding is cheaper than post-notice compounding.

Form LLP-II Filing on the FIRMS Portal for Transfers of LLP Capital Contribution Between Residents and Non-Residents

Form LLP-II is the FEMA reporting form filed on the FIRMS portal when there is a transfer of capital contribution or profit share in an Indian Limited Liability Partnership (LLP) between a resident and a non-resident partner — whether the transfer is from a resident partner to a non-resident (incoming investment) or from a non-resident partner to a resident (disinvestment). LLP-II is the LLP equivalent of Form FC-TRS used by Indian companies to report share transfers. The filing is required on the FIRMS portal through the AD Category-I bank within 60 days of the date of transfer of capital contribution or receipt of consideration, whichever is earlier.

Transfers of LLP capital contribution between residents and non-residents must comply with FEMA pricing guidelines — the transfer price must be determined based on a methodology as prescribed by the RBI (typically based on a valuation by a SEBI-registered Merchant Banker or a Chartered Accountant). Our LLP-II filing service manages the complete process — eligibility assessment, pricing compliance, FIRMS portal filing, and AD bank coordination. This connects with our LLP-I filing, FDI filing, and FEMA consulting services.

Our LLP-II Form Filing Services

Transfer Eligibility Assessment

Assessment of whether the proposed transfer of LLP capital contribution between a resident and non-resident partner is permissible under current NDI Rules and FEMA pricing guidelines.

Valuation for Transfer Pricing

Coordination with SEBI-registered Merchant Banker or Chartered Accountant for determination of the permissible transfer price under FEMA pricing guidelines — ensuring compliance with arm's-length pricing requirements.

LLP-II Form Preparation

Preparation of Form LLP-II with all mandatory disclosures — transferor and transferee details, amount of capital contribution transferred, transfer price and basis, date of transfer, and payment details.

FIRMS Portal Submission

Online submission of Form LLP-II on the FIRMS portal within 60 days of the transfer date or receipt of consideration — whichever is earlier.

AD Bank Coordination and Certification

Coordination with the LLP's AD Category-I bank for certification of the LLP-II filing and forwarding to the RBI — including management of AD bank documentation requirements.

Late LLP-II Compounding

Advisory and compounding application preparation for LLPs that have missed the 60-day LLP-II filing deadline — including FEMA liability assessment and RBI compounding application management.

Key Compliance Points for LLP Capital Contribution Transfers

LLP-II must be filed within 60 days of the transfer date or receipt of consideration — the same timeline as FC-TRS for company share transfers
Transfer price must comply with FEMA pricing guidelines — sale by resident to non-resident must not be below FMV; sale by non-resident to resident must not exceed FMV
Both buyer and seller must retain documentation of the valuation basis — FEMA pricing compliance is assessed at the time of any subsequent regulatory review
Capital contribution transfers trigger repatriation or payment obligations through authorised banking channels — cash payments or off-market transfers are not permissible
LLP-II filings are tracked on FIRMS and cross-referenced with incoming/outgoing remittance data — discrepancies between filings and bank data trigger RBI enquiries
After a non-resident partner's exit via LLP-II, the LLP must update its FLA return to reflect the changed foreign investment position

Frequently Asked Questions

What is Form LLP-II under FEMA?

Form LLP-II is the FEMA reporting form filed on the FIRMS portal to report the transfer of capital contribution or profit share in an Indian LLP between a resident and a non-resident partner. It is filed within 60 days of the transfer date or receipt of consideration (whichever is earlier) and is the LLP equivalent of FC-TRS (used by Indian companies). Both incoming transfers (resident to non-resident) and outgoing transfers (non-resident to resident) require LLP-II filing.

What are the FEMA pricing rules for LLP capital contribution transfers?

FEMA pricing guidelines for LLP capital contribution transfers require: (a) when a resident partner transfers to a non-resident, the transfer price must not be less than the FMV of the capital contribution as determined by a SEBI-registered Merchant Banker or a Chartered Accountant using internationally accepted valuation methodologies; (b) when a non-resident partner transfers to a resident, the transfer price must not exceed the FMV. These rules prevent undervaluation of India's FDI (which could circumvent FEMA controls) and overvaluation (which could result in excess remittances abroad).

Can profit share in an LLP be transferred to a non-resident?

Yes. The transfer of profit share (in addition to capital contribution) in an LLP from a resident partner to a non-resident partner constitutes a transfer of economic interest and must comply with FEMA pricing and reporting requirements under LLP-II. Similarly, when a non-resident partner sells their profit share to a resident partner, the transaction must meet FEMA pricing guidelines and be reported via LLP-II. Profit share transfers that are structured to circumvent FEMA pricing guidelines are treated as FEMA contraventions.

Is stamp duty payable on the transfer of LLP capital contribution?

LLP capital contribution transfers may attract stamp duty under the applicable state Stamp Act. The stamp duty treatment varies by state — some states levy stamp duty on instruments of capital contribution transfer; others may treat it differently from the transfer of shares in a company. Our team advises on the applicable stamp duty and ensures the transfer instrument is properly stamped before registration — avoiding any stamp duty related challenge to the FEMA compliance or the validity of the transfer.

What happens if the LLP-II is filed late?

Late filing of Form LLP-II is a contravention of the FEMA NDI Rules and attracts compounding liability under Section 15 of FEMA. Compounding fees are computed based on the amount of capital contribution transferred and the number of days of delay. Voluntary compounding at the earliest opportunity — before the RBI issues a notice — results in lower total fees. Our team calculates the estimated compounding exposure, prepares the compounding application, and represents the client in the compounding process with the RBI Regional Office.

File Your LLP-II Form Correctly and On Time

Expert LLP-II preparation, valuation coordination, FIRMS filing, and FEMA compounding advisory.