The government allows incorporation of LLPs with foreign partners under the automatic route, provided the sector is allowing 100% FDI. The investors may be NRIs, OCIs, foreign nationals, and foreign companies (except from Pakistan and Bangladesh). The capital may be contributed in accordance with fair market valuation norms and may be remitted through banking channels or NRE/FCNR accounts.

What is LLP

LLP is one of its kind of hybrid business structures in India, and it was introduced through the Limited Liability Partnership Act, 2008. In a short period, after its introduction, it gained popularity as a business structure for small businesses due to lower registration costs and compliance requirements as compared to a private limited company. As LLP provides the advantages of both, i.e., a private limited company and partnership firms, it is the most popular choice for non-resident Indians and Foreign Nationals too.

LLPs have to follow the rules set out in the Foreign Exchange Management Act (FEMA) when it comes to moving capital around. It's important that the partners make sure their LLP doesn't get involved in any sectors that are off-limits, like agriculture or real estate.

Benefits of LLP Registration for NRI

1. Limited Liability:

The partners of an LLP do not have any liability for the debts and other financial liabilities of the company. Simply put, this characteristic of an LLP provides security for the partners.

2. No Minimum Capital:

The absence of a minimum capital requirement for an LLP makes it easy for NRIs and other Foreign Nationals to simply start a business in India without the presence of any financial barriers.

3. Flexible Management:

This business structure provides flexibility for the partners to run the business according to their ideology without the interference of any external party.

4. Easier Compliances:

 The compliance requirements for an LLP are relatively fewer compared to the compliance requirements of other business structures, making it relatively easier to run and manage this business structure.

5. Tax Exemption:

Since an LLP is considered a partnership firm, it is exempt from corporate tax. However, the partners of the company are subject to tax individually.

Types of Limited Liability Partnership for NRIs

The following are the ways in which NRIs can be associated with an LLP:

1. LLP with Indian Partners

At least one partner to be designated as an Indian resident

NRI to be a partner/investor

2. LLP with NRI Partners Only

Allowed if at least one partner designated as a resident in India

FDI regulations to be adhered to

3. Foreign-Owned LLP

If the major source of funds comes from NRIs or foreigners

Allowed in sectors with 100% FDI under the automatic route

Step by Step Procedure for LLP Registration in India for NRIs

Step 1. Digital Signature Certificate (DSC)

If you are registering an LLP and the partners are NRIs or foreign nationals, the first step is to obtain a digital signature certificate for all the partners. To do this, a signed application for a DSC needs to be submitted along with a notarized copy of your passport and address proof, such as your driver’s license or resident card.

Step 2. Designated Partner Identification Number (DPIN)

It is mandatory for every partner in the LLP to have a DPIN. This is similar to the Director Identification Number that is required when forming a company.

Step 3. Name Approval

If two DPINs are available, then an application for reservation of the name of LLP can be made to the Ministry of Corporate Affairs (MCA). Six names can be proposed in the application as per the LLP Act, 2008.

The proposed name(s) must conform to the predefined guidelines and must not be identical to any existing company/LLP name. Once the acceptance of any of the proposed names is obtained, the incorporation application can be made within 60 days.

Step 4. Incorporation of LLP

Once the approval of the proposed LLP Name is obtained from the Government of India, an application for LLP Registration for NRIs and Foreign Nationals is required to be submitted to the MCA.

The application for LLP Registration must also include the requisite documents to support the application. Once the application is scrutinized on different parameters, a certificate of incorporation is issued by the Ministry, provided it finds the details and documents provided to be valid and legitimate.

Step 5. Filing of LLP Agreement

After obtaining the certificate of LLP Registration for NRIs and Foreign Nationals, the next step is to execute and file an LLP agreement with the MCA within 30 days from the date of receipt of the certificate of incorporation.

Required Documents of LLP registration for NRIs

If you are an NRI and want to incorporate an LLP in India, there are a few basic criteria you must fulfill. Here is what you need:

1. You must have at least two partners to incorporate an LLP.
2. You must have at least two directors, one of whom must be a resident of India.
3. You must have a registered office in India.
4. NRIs or foreign citizens must provide identity proof, address proof, etc.
5. You must get all your documents attested before you proceed with incorporating an LLP in India.

In addition to this, you must have a

1. valid mobile
2. phone number
3. email ID,
4. a passport-sized photograph,
5. a digital signature,
6. attested copies of your passport
7. address proof.
8. PAN Card
9. LLP Agrement

At Tax Esquire, we are of the firm belief that an LLP is one of the most viable and growth-oriented business models for NRIs looking to enter the Indian market. This business model provides the perfect combination of flexibility and cost efficiency while at the same time ensuring compliance with Indian laws. NRIs can now look to set up and manage their ventures in India without any hassle, thanks to the right guidance from our team. We at Tax Esquire make the process as simple as possible for you, from documentation to post-registration compliance. Partner with Tax Esquire to make your vision a reality.