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Partnership Firm Registration

Sunny Madaan & Associates > Firm & Company Registration > Partnership Firm Registration

Registration of Partnership Firm

  • Hassle free partnership firm registration with expert support
  • Partnership deed drafting done by senior experts
  • Complete guidance and filing support for partnership deed registration
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Partnership Firm Registration

A partnership firm is a popular business structure commonly chosen by newly established businesses in India. It requires a minimum of two partners to be formed.

The formalization of a partnership firm is done through a partnership deed an important document that outlines the terms and conditions agreed upon by the partners. This deed serves as a guide for managing the firm’s operational and financial arrangements, ensuring clarity and mutual understanding among the partners.

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Checklist for Partnership Firm Registration

The checklist for registering a partnership firm in India includes:

 

  • Finalize Partners: Minimum of two partners are required to start the firm.

  • Select a Name: Choose a unique name for your partnership firm that does not infringe on existing trademarks.

  • Draft Partnership Deed: Prepare a formal agreement outlining profit-sharing, capital contribution, and roles.

  • Business Address: Identify a registered office address for the firm.

  • Apply for PAN & TAN: Obtain a dedicated Permanent Account Number and Tax Deduction Account Number in the firm’s name.

  • Registration (Optional but Recommended): While not mandatory, registering with the Registrar of Firms (RoF) provides legal benefits.

 

Eligibility Criteria for Partnership Firm Registration

The eligibility criteria for partnership registration are:
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  • Minimum Partners: At least two individuals are required.

  • Maximum Partners: The limit is generally 50 partners under the Companies Act.

  • Competency to Contract: Every partner must be of sound mind, a major (above 18), and not disqualified by any law.

  • Lawful Object: The business must be formed for a legal purpose or trade.

  • Profit Sharing: There must be a clear intent to share profits earned from the business.

 

Required Documents for Partnership Firm Registration

The following documents are required for Partnership Registration:

 

  • Partners’ Documents: PAN Card and Aadhaar Card/Voter ID of all partners.

  • Partnership Deed: A copy of the deed signed by all partners on appropriate stamp paper.

  • Address Proof of Business: Electricity bill, water bill, or property tax receipt.

  • Rent Agreement & NOC: If the premises are rented, a rent agreement and a No Objection Certificate (NOC) from the landlord.

  • Photos: Recent passport-size photographs of all partners.

 

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Post-Registration Compliances Partnership Firms

After registration, a partnership firm must adhere to these ongoing requirements:

Filing Income Tax Returns

 Partnership firms must file an ITR-5 every financial year, regardless of profit or loss.

gst Returns

 If the firm is GST-registered, regular monthly or quarterly returns must be filed.

TDS Returns

If the firm pays salaries or professional fees, it must deduct and file TDS returns.

Statutory Audit

If the turnover exceeds the limits specified under the Income Tax Act, a tax audit by a Chartered Accountant is mandatory.

Annual Maintenance

 Keeping updated minutes of meetings (if applicable) and accurate books of accounts.

 

paRTNERSHIP Tax Implications

Unlike a sole proprietorship, a partnership firm is treated as a separate legal entity for tax purposes:

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Flat Tax Rate

Partnership firms are generally taxed at a flat rate of 30% on their total income (plus applicable surcharge and cess).

Remuneration to Partners

Salaries and interest paid to partners are deductible expenses for the firm (subject to limits under Section 40(b)).

Tax on Partners

 Share of profit received by partners from the firm is exempt from tax in the hands of the partners, as the firm has already paid tax on it.

FAQs on Partnership Firm Registration

What is the minimum number of partners required?
What is the minimum number of partners required?

A minimum of two partners is required to form a partnership firm.

Is it mandatory to register a partnership firm?

No, registration under the Indian Partnership Act, 1932 is optional. However, an unregistered firm cannot sue third parties or other partners in court for enforcing rights.

Can a partner be a company?

Yes, a body corporate (like a Private Limited Company) can be a partner in a partnership firm.

Can we change the terms of the Partnership Deed later?

Yes, the deed can be amended at any time by creating a Supplementary Deed and filing it with the Registrar of Firms.

Does a partnership firm have its own PAN?

Yes, a partnership firm must apply for a separate PAN card in the name of the firm.