Since the taxation related matters in India are provided under Tax Laws, the taxation of LLPs was not provided in the Limited Liability Partnership (LLP) Act, 2008. The Finance Bill, 2009 has made provisions in this regard, pursuant to which the taxation scheme of LLPs has been proposed to be introduced in the Income Tax Act. It has been proposed,

• to tax LLPs on the lines similar to general partnerships (EXCEPT for recovery purposes) under Indian Partnership Act, 1932, i.e. taxation in the hands of the entity and exemption from tax in the hands of its partners. 
• Consequent changes in the definitions of Income-tax Act, 1961 like (i) the word ‘partner’ to include within its meaning a partner of a limited liability partnership, (ii) the word ‘firm’ to include within its meaning a limited liability partnership and (iii) the word ‘partnership’ to include within its meaning a limited liability partnership as these terms have been defined in the Limited Liability Partnership Act, 2008 have also been proposed in the Finance Bill, 2009.
• that the he designated partner shall sign the income tax return of an LLP, or, where, for any unavoidable reason such designated partner is not able to sign the return or where there is no designated partner as such, any partner shall sign the return.
• that in case of liquidation of an LLP, every partner will be jointly and severally liable for payment of tax unless he proves that non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part.
• that the conversion from a general partnership firm to an LLP will have no tax implications if the rights and obligations of the partners remain the same after conversion and if there is no transfer of any asset or liability after conversion. In case of violation of these conditions, the provisions of section 45 of Income-tax Act shall apply.
• that the amendments will be effective from the 1st day of April 2010 i.e. assessment year 2010-11.

Source: Press Note No.1/16/2007-CL.V dated 10/07/2009 on Taxation of Limited Liability Partnerships