In a progressive policy update, the Ministry of Corporate Affairs (MCA) has authorized Limited Liability Partnerships (LLPs) to issue employee remuneration through digital payment modes, aligning them with modern payroll practices and India’s Digital Governance initiatives. Effective from July 2025, this reform allows LLPs to process salaries, stipends, and partner remuneration via platforms like NEFT, RTGS, IMPS, UPI, and direct bank transfers, thereby improving transparency, traceability, and financial compliance across small and medium enterprises.

Under the new framework, all payments made to employees or partners must be recorded in digital format and reflected in Form 8 (Statement of Account and Solvency), ensuring that payroll transactions are part of official financial disclosures. LLPs are also encouraged to link their salary disbursements with PAN and Aadhaar-enabled bank accounts to prevent fraudulent claims and promote accountability. The MCA clarified that while cheque or cash payments are not banned, digital payments will now be the preferred and recommended mode for all remuneration-related transactions.

This move is especially beneficial for LLPs operating in service sectors such as IT, design, legal, and consulting, where remote work and digital payments are already standard. Experts say this reform will streamline payroll processes, strengthen audit trails, and reduce compliance risks, especially during tax assessments or regulatory audits. Additionally, it supports the government’s ongoing push toward a cashless economy while encouraging financial inclusion and formal wage reporting among LLPs that may have previously operated in hybrid models.