Section 331
Section 331: liability of partners of an LLP in liquidation
Section 331 addresses what happens when tax due from a limited liability partnership (LLP) cannot be recovered from the LLP itself. It overrides the limited-liability protection normally available under the LLP Act, 2008 in this specific tax-recovery scenario, unless a partner can show they were not at fault.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
What Section 331 says
"Irrespective of anything contained in the Limited Liability Partnership Act, 2008 (6 of 2009), where any tax including penalty, interest, fee or any other sum payable under the Act is due and cannot be recovered from-- (a) the limited liability partnership in respect of any income of any tax year; or (b) any other person in respect of any income of any tax year during which such other person was a limited liability partnership, then, in such case, every such person who was a partner of such limited liability partnership at any time during the relevant tax year, shall be jointly and severally liable for the payment of such tax due unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the limited liability partnership."
How the liability and the defence work
This section applies whenever tax, penalty, interest, fee or any other sum payable under the Act relating to an LLP's income cannot be recovered from the LLP itself (whether the LLP still exists in that form, or was an LLP during the relevant tax year).
Every person who was a partner of the LLP at any time during the relevant tax year is jointly and severally liable for the unrecovered amount.
A partner can escape this liability only by proving that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on their part in relation to the affairs of the LLP - the burden of proof is on the partner, not the tax department.
Frequently asked questions
Does an LLP's limited liability protect its partners from unpaid tax dues?
Not automatically. Section 331 overrides the Limited Liability Partnership Act, 2008 in this context - if the LLP's tax dues cannot be recovered from the LLP, every person who was a partner at any time during the relevant tax year is jointly and severally liable, unless they prove they were not guilty of gross neglect, misfeasance or breach of duty.
How can a partner avoid this liability?
By proving that the LLP's failure to pay the tax due cannot be attributed to any gross neglect, misfeasance or breach of duty on their part in relation to the affairs of the LLP.
Related sections
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Discuss LLP partner tax liability with our tax teamLast updated 9 September 2026