In a move to strengthen financial accountability, the Income Tax Department, in coordination with the Ministry of Corporate Affairs (MCA), has directed Limited Liability Partnerships (LLPs) to maintain annual tax transparency records starting from the financial year 2024–25. The directive aims to bring LLPs in line with global tax disclosure standards and enhance regulatory visibility into their financial operations. These records are to be maintained in a prescribed format and retained for at least eight years, making them readily available during audits or compliance assessments.

According to the new guidelines, LLPs must prepare a consolidated annual tax transparency report that includes a summary of tax paid, TDS deducted and deposited, GST filings, and foreign transactions (if any). Additionally, the report must reflect any cross-border arrangements, transfer pricing disclosures, and partner remuneration reported in the income tax filings. While this document does not require submission to the department unless requested, it will serve as a key internal compliance tool and may be requested during scrutiny or investigation proceedings.

The authorities have emphasized that the objective is not to impose a new filing burden, but to promote internal governance, data readiness, and ethical tax behavior among LLPs, especially those with complex structures or international exposure. To support compliance, the MCA and Income Tax portals will offer downloadable templates and integration options for auto-importing data from filed returns. Tax professionals are advising LLPs to align their accounting systems, document audit trails, and conduct annual internal reviews to ensure consistency and accuracy in their transparency reports.