At a glance
| Partners | Governing law | Registered with | Our fee |
|---|---|---|---|
| 2 to 50 | Indian Partnership Act, 1932 | State Registrar of Firms | From ₹1,499 |
What is a partnership firm?
A partnership is "the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all", under section 4 of the Indian Partnership Act, 1932. The partners together are the firm; the firm is not a separate legal person.
That has two results. Every partner is liable jointly and severally for the firm's debts, so personal assets are at risk. And each partner can bind the firm in the ordinary course of business, which is why the deed matters.
Who a partnership firm suits
A firm works best where two or more people who know each other well put in capital or skill, agree how to share profits, and accept joint liability for the firm's debts. We most often register firms for:
- Family trading and retail businesses bringing the next generation in as partners.
- Co-founders testing a business model before taking on the annual filings of an LLP or a company.
- Wholesalers, distributors and small manufacturers with one working partner and one financing partner.
- Service firms such as agencies, consultancies and coaching institutes with two to ten partners.
- Hospitality and food businesses where the partners share the day-to-day running.
The same structure is common among construction and interior contractors, real estate brokers and owner-operated transport fleets. If you will be the only owner, sole proprietorship registration is simpler. If you plan to bring in outside investors, start as a private limited company instead.
Is registration of a partnership firm mandatory?
No. Registration under the Indian Partnership Act, 1932 is optional, and a firm can register at any time. But an unregistered firm loses important legal rights, so we recommend registering before the firm signs significant contracts.
What section 69 means for an unregistered firm
Section 69 of the Act puts three limits on a firm that is not registered:
- The firm cannot sue a third party to enforce a right arising from a contract, such as recovering an unpaid invoice from a customer.
- A partner cannot sue the firm or the other partners to enforce a right arising from the contract of partnership or under the Act.
- The firm cannot claim a set-off above a small value in a suit filed against it.
Others can still sue the firm. A partner can still sue for dissolution, for accounts of a dissolved firm or to realise its property.
What changes the day the certificate is issued
Once the Registrar records the firm, the section 69 bar falls away. The firm can file civil suits and recover its dues from customers and other third parties, and partners can enforce their rights against each other and against the firm in court. In practice, banks, lenders and large customers often ask for the registration certificate too.
Who can be a partner
The Act keeps the bar low, but each condition is applied strictly. A partner who fails one of them at formation can leave the deed open to challenge.
| Requirement | Position |
|---|---|
| Minimum partners | Two persons capable of entering into a contract |
| Maximum partners | 50, under rule 10 of the Companies (Miscellaneous) Rules, 2014 read with section 464 of the Companies Act, 2013 |
| Age | At least 18. A minor cannot be a partner but can be admitted to the benefits of the partnership (section 30) |
| Mental capacity | Of sound mind and not disqualified by any law from contracting |
| Insolvency | An undischarged insolvent cannot be a partner |
| Husband and wife | Can be partners together; some older state circulars want the deed to record the relationship |
| Hindu Undivided Family | The HUF itself cannot be a partner; its Karta can, in his individual capacity |
| Company | Can be a partner if its memorandum permits, acting through an authorised person |
| NRI or foreign national | Can be a partner subject to FEMA where it applies; a wholly non-resident partnership needs prior RBI approval |
| Firm name | Must not be identical or deceptively similar to a registered firm or a trademark, and must avoid restricted words |
Minors, HUFs and companies as partners
A minor can share in the profits of an existing firm with the consent of all the partners, but is not personally liable for its debts. On turning 18, the minor has six months to elect, by public notice, whether to become a partner (section 30).
An HUF is not a person that can enter a partnership, so the Karta joins in his own name and is treated as an individual partner. A company can join a firm only if its memorandum allows it, and an authorised representative signs the deed and acts for it.
NRIs and foreign nationals
A non-resident Indian or a foreign national can be a partner, subject to FEMA where it applies. A firm made up wholly of non-residents needs prior approval from the Reserve Bank of India. Foreign investment into a firm is far more restricted than into a company or an LLP, so a business that expects foreign capital usually starts as one of those.
Choosing a firm name
The name should not copy or closely resemble another registered firm or a registered trademark. Section 58(2) bars words such as Crown, Emperor, Empress, Empire, Imperial, King, Queen or Royal, and any word implying the government's sanction or patronage, unless the state government consents in writing. We check the name against the state register and the trademark records before drafting.
Who registers partnership firms in your state
Each state appoints its own Registrar of Firms under section 57 of the Act. The authority, the portal and the procedure differ by state.
| State | Registering authority | How to apply |
|---|---|---|
| West Bengal | Office of the Registrar of Firms, Societies and Non-Trading Corporations, West Bengal | Online at registrarfsntc.wb.gov.in; the application asks for the trade licence of the principal place of business; the service is covered by the West Bengal Right to Public Services Act, with a 30-day timeline |
| Delhi | Registrar of Firms, through the district offices of the Delhi Government | Online at firmsociety.delhi.gov.in |
| Maharashtra | Registrar of Firms, Maharashtra State, Mumbai (Law and Judiciary Department) | Online at rof.mahaonline.gov.in |
| Haryana | Registrar of Firms at the district level | Through the Haryana Department of Industries and Commerce portal |
| Karnataka | Department of Stamps and Registration, under the Karnataka Partnership (Registration of Firms) Rules, 1954 | Online through igr.karnataka.gov.in |
Registration fees, stamp duty and the exact forms are set by each state. We confirm them for your state and include them in your written quote before filing.
The partnership deed
The deed is the written agreement between the partners. It is not strictly required by law, but the Registrar needs the partners' details, and without a deed the default rules of the Act apply, including equal profit sharing.
Clauses every deed should have
- Name and address of the firm, the principal place of business and any other places
- Names and addresses of the partners, and the date each joined
- Nature of the business and the duration of the firm (fixed term or at will)
- Capital contributed by each partner
- Profit and loss sharing ratio
- Interest on capital and on partners' loans, and remuneration of working partners (needed for the tax deduction under section 40(b), explained below)
- Duties, powers and bank signing authority of each partner
- Admission, retirement, expulsion and death of a partner
- Accounts, audit and drawings
- Dispute resolution, including arbitration
- Dissolution and settlement of accounts
We draft the deed to suit your business. For a deed-only service, see partnership deed drafting.
Stamp duty and notarisation
The deed is printed on non-judicial stamp paper or e-stamped at the rate your state prescribes, signed by all partners before witnesses, and usually notarised. Stamp duty differs by state and can depend on the capital; we quote it before you buy the stamp paper. If a partner brings immovable property into the firm, the deed may also need registration with the sub-registrar under section 17 of the Registration Act, 1908. That is checked case by case at the drafting stage.
Documents you need
From each partner
- PAN card
- Aadhaar, or passport, voter ID or driving licence
- Address proof not older than two months: bank statement, electricity, telephone or mobile bill
- Recent photograph, email ID and mobile number
- For a partner living outside India, a notarised and apostilled copy of the passport
For the principal place of business
- Electricity bill or property tax receipt
- Rent agreement, if rented, and a no-objection certificate from the owner
- In West Bengal, the trade licence for the premises
For the firm
- Signed and stamped partnership deed
- The registration application in the state's format, signed and verified by all partners
- Specimen signatures of the partners, and an affidavit where the state asks for one
How to register a partnership firm: step by step
- Consultation. We confirm the partners, capital, profit ratio and the state of the principal place of business, and check that a firm suits you better than an LLP.
- Name check. The name should not copy another firm's name or use protected words; we check it before drafting.
- Deed drafting. We draft the deed and share it for review.
- Stamping and signing. You buy stamp paper or an e-stamp at the state rate; all partners sign before witnesses and the partnership deed is notarised.
- Firm PAN. We apply for the firm's PAN in Form 94, which replaced Form 49A for Indian non-individuals from 1 April 2026; see PAN registration.
- Registration. We file the application in the state's prescribed form with the deed, partner documents and the state fee. Each partner signs the affidavit or verification the state asks for, and we answer any query the Registrar raises.
- Certificate. The Registrar records the firm in the Register of Firms and issues the registration certificate.
- Bank account and registrations. The firm opens a current account and adds TAN registration if it will deduct TDS, GST registration, Udyam registration, Shop and Establishment and any licence it needs.
Timeline, and who owns each stage
| Stage | Who acts | Usual time |
|---|---|---|
| Name check and deed drafting | Regikart | 2 to 3 working days |
| Stamp duty, signing and notarisation | Partners, with our coordination | 1 to 2 working days |
| Firm PAN | Regikart files; the Income Tax Department issues | Runs alongside the filing stages |
| Filing with the Registrar of Firms | Regikart | 1 working day |
| Verification and any query | State Registrar; we reply to queries | Set by the state |
| Registration certificate | State Registrar | Set by the state |
| Bank account, TAN and GST | Regikart, with the partners | Runs alongside the Registrar's review |
For a complete file, most registrations close in about 10 to 14 working days. The Registrar's part varies by state: West Bengal, for example, publishes a 30-day service timeline, so we give you the expected date for your state at the start.
What our ₹1,499 package includes
Our professional fee for partnership firm registration starts at ₹1,499 plus GST.
Included
- Consultation on partners, capital, profit sharing and state
- Drafting of the partnership deed
- Application for the firm's PAN
- Preparation and filing of the registration application with the Registrar of Firms
- Replies to Registrar queries
- Coordination for the current account opening documents
Not included, quoted separately if you want them
- Stamp duty, notarisation and the state registration fee
- GST registration, Udyam registration, Shop and Establishment registration and TAN
- Accounting, GST returns and the firm's income-tax return
- Trademark registration for the firm's name or brand
Partnership firm registration fees
Your total is our fee plus state charges. State charges depend on where the firm's principal place of business is.
| Fee | Amount |
|---|---|
| Professional fee (Regikart) | From ₹1,499 |
| Registrar of Firms registration fee | Set by each state; quoted before filing |
| Stamp duty on the partnership deed | Set by each state; quoted before you buy stamp paper |
| Firm PAN (Form 94) | ₹107 with a physical card (Indian address); ₹66 or ₹72 for e-PAN only |
| TAN, if the firm deducts TDS | ₹65 plus GST |
| GST registration | No government fee |
| Udyam registration | Free |
Professional fees exclude GST at 18%. Government fees, where they apply, are paid at actuals to the department and are shown separately. Fees verified on 25 September 2026.
How a partnership firm is taxed
A firm pays income tax on its profits; partners do not pay tax again on their share of profit. Which Act applies depends on the year.
FY 2025-26 under the Income-tax Act, 1961
For FY 2025-26 (AY 2026-27), a partnership firm pays:
| Item | Rate |
|---|---|
| Income tax | 30% |
| Surcharge | 12% where total income exceeds ₹1 crore |
| Health and education cess | 4% on tax plus surcharge |
A partner's share of the firm's profit is exempt in the partner's hands under section 10(2A). The firm files ITR-5, or ITR-4 where it opts for presumptive tax and its income is up to ₹50 lakh. A firm, but not an LLP, can use presumptive tax under section 44AD for business or section 44ADA for specified professions; see ITR for business.
Partner salary and interest: section 40(b)
A firm can deduct interest and remuneration paid to partners only if the deed authorises them, and only up to these limits:
| Payment | Deductible limit for FY 2025-26 |
|---|---|
| Interest on partners' capital | Up to 12% simple interest a year |
| Remuneration to working partners, first ₹6,00,000 of book profit or a loss | ₹3,00,000 or 90% of book profit, whichever is higher |
| Remuneration on the balance of book profit | 60% of book profit |
The partner pays tax on this interest and remuneration as business income. From FY 2025-26, the firm also deducts TDS under section 194T on salary, remuneration, commission, bonus and interest paid to partners.
Tax Year 2026-27 onwards
From 1 April 2026, the firm's income is taxed under the Income-tax Act, 2025, which uses "tax year" in place of "previous year". We confirm the rates and limits for your firm under the new Act when we prepare its first return for Tax Year 2026-27.
Compliance after registration
A firm has no annual filing with the Registrar of Firms and no ROC filings. Its yearly load is tax and GST.
| Compliance | When |
|---|---|
| Income-tax return (ITR-5 or ITR-4) for FY 2025-26 | 31 August 2026 if no tax audit; 31 October 2026 with a tax audit; belated return up to 31 December 2026 |
| Tax audit | When turnover exceeds ₹1 crore (₹10 crore if cash receipts and payments are each within 5%), or professional receipts exceed ₹50 lakh |
| Advance tax | 15 June, 15 September, 15 December and 15 March, where tax is ₹10,000 or more |
| GST returns | Monthly or quarterly, once registered; see GST filing |
| TDS returns | Quarterly, if the firm deducts TDS. From the quarter starting 1 April 2026, Form 140 for payments to residents and Form 138 for salary under the Income-tax Act, 2025; quarters up to 31 March 2026, including corrections filed now, stay on Forms 26Q and 24Q. See TDS return filing |
| Changes in the firm | Report to the Registrar when partners, the firm name or the place of business change (section 63 and state rules) |
Our partnership firm compliance service covers the year.
Partnership firm vs LLP vs private limited company
A firm is the cheapest to start and run, but partners carry unlimited liability. An LLP adds limited liability with annual MCA filings. A private company suits a business that will raise equity.
| Point | Partnership firm | LLP | Private limited company |
|---|---|---|---|
| Registration | Optional, with the state Registrar of Firms | Mandatory, with the MCA | Mandatory, with the MCA |
| Separate legal entity | No | Yes | Yes |
| Liability | Unlimited, joint and several | Limited to agreed contribution | Limited to shares |
| Annual MCA filings | None | Form 11 and Form 8 | AOC-4, MGT-7 or MGT-7A |
| Presumptive tax (44AD/44ADA) | Available | Not available | Not available |
If limited liability matters, see LLP registration. If you plan to raise equity, see private limited company registration. Our partnership firm registration guide sets out the full comparison and the law behind it.
Limitations to weigh before you choose a firm
A firm is quick and cheap to set up, but it has real limits. None is a deal-breaker on its own; together they explain why growing firms often move to an LLP or a company.
- Unlimited liability. Each partner is personally liable for the firm's debts, including those created by another partner in the course of business.
- No perpetual succession. Unless the deed provides otherwise, the death, retirement or insolvency of a partner can dissolve the firm.
- The 50-partner cap limits how far the firm can grow in headcount of owners.
- Foreign investment is restricted in most sectors.
- Institutional investors such as venture funds generally do not invest in partnership firms.
- Bank credit for a firm is often sanctioned at lower limits than for a company of similar turnover.
Converting to an LLP or a company later
Many firms that grow convert rather than close and start again. The business, its assets and its contracts move across to the new entity. Check the tax and stamp duty effects for your firm before you start.
Partnership firm to LLP
A firm can convert into an LLP under the Second Schedule to the LLP Act, 2008. All the partners of the firm must become partners of the LLP, and no one else can join at the point of conversion. The firm files the conversion application with the MCA along with the LLP incorporation form. We can convert your firm into an LLP end to end.
Partnership firm to private limited company
A firm can register as a company under Part I of Chapter XXI of the Companies Act, 2013 (section 366), filing Form URC-1 with the incorporation. The partners become the company's first shareholders. We handle the filing alongside private limited company registration. See how to convert the firm into a private limited company.
Changing or closing the firm
- Admitting or retiring a partner: execute a supplementary deed or retirement deed and report the change to the Registrar.
- Dissolution: by agreement, notice (for a partnership at will) or court order; settle accounts and inform the Registrar.
Common mistakes
Five mistakes cause most of the partnership disputes and re-filings we are asked to fix. Each is invisible at the start and expensive later.
- Using a template deed. Generic deeds usually leave out dispute resolution, admission and retirement terms, and what happens to firm property on dissolution. The first dispute exposes the gap, and the fix is a fresh deed.
- Paying the wrong stamp duty. An under-stamped deed is not admissible in evidence until the deficit and a penalty are paid, and the Registrar can reject it on filing. We confirm the duty for your state before you buy stamp paper.
- Skipping registration. The saving is small. The cost shows up the first time the firm needs to sue for an unpaid invoice under section 69, or a bank or buyer asks for the certificate.
- Not authorising remuneration in the deed. Partner salary and interest on capital are deductible under section 40(b) only if the deed authorises them and sets out how they are worked out. A deed that says "as mutually agreed" loses the deduction.
- Ignoring spouse-partner formalities. Where a husband and wife are the only partners, some states want extra declarations or a specific recital in the deed. Filing without them invites a query and delay.
Why partners choose Regikart
Regikart is a CA and CS firm with 250+ clients. Partnership registrations are prepared by our team and reviewed by a Company Secretary before filing.
- Deeds drafted with tax in mind. Interest and remuneration clauses that work with section 40(b).
- State knowledge. We file with the Registrar of Firms in your state and quote its fee and stamp duty before you sign.
- One team afterwards. GST, TDS, accounting, the firm's return and tax audit.
- Offices in Kolkata (Head Office), Delhi and Bengaluru, with documents shared over WhatsApp and email.
Call or WhatsApp +91 70444 94804, or email [email protected].