Partnership Deed

Overview

A partnership deed, also known as a partnership agreement or partnership contract, is a legal document that outlines the rights, responsibilities, and obligations of partners in a partnership firm in India.

It serves as a written agreement between the partners, defining the terms and conditions of their partnership and establishing the framework for their business relationship.

It is important for partners to consult with a our qualified chartered accountant at SURE TAX FINCARE to draft a partnership deed that aligns with their specific requirements and complies with applicable laws and regulations in India.

Legal Requirement as per the Partnership Act ,1932

Under the Partnership Act, 1932 in India, partnership may be formed by an oral agreement or by a written agreement between the partners. Partnership deed can be executed on a non-judicial stamp paper & it can either be notarised by a Public Notary or it can be registered with the Registrar of Firms and Societies of respective jurisdictions.

Key Elements of Partnership Deed

Name and address

The partnership deed begins with the name and address of the partnership firm, along with the names and addresses of all the partners.

Duration

It states the duration of the partnership, whether it is for a fixed period or an indefinite period (at will).

Profit and loss sharing

It specifies the percentage or ratio in which the profits and losses of the partnership will be shared among the partners.

Nature of the business

The deed specifies the nature of the business or activities that the partnership will undertake.

Capital contribution

The deed outlines the amount of capital contributed by each partner and the proportion of their share in the partnership.

Other clauses

The partnership deed may include clauses related to authority of powers, admission and retirement of partners, dissolution, dispute resolution,etc.

Areas where there is requirement of Partnership Deed

1. Goods and Services Tax (GST) Registration
2. Registrar of Firms
3. Shop and Establishment Registration
4. Professional Tax Registration
5. Import-Export Code (IEC)
6. Opening Bank Accounts
7. Trademark Registration

Frequently Asked Question

Yes, a partnership deed can be modified or amended if all the partners mutually agree to the changes. It is important to document any amendments in writing and have all partners sign the revised partnership deed.

A partnership can be dissolved as per the terms mentioned in the partnership deed. If the partnership deed is silent on dissolution, partners can follow the provisions of the Partnership Act, which include giving notice to all partners, settling liabilities, and distributing the remaining assets.

While registration of a partnership deed is not mandatory, partners have the option to register the partnership with the Registrar of Firms. Registering the partnership provides additional legal benefits, such as the ability to file a lawsuit against a third party and avail tax benefits.

In the absence of a partnership deed, the provisions of the Partnership Act will govern the partnership. However, this may lead to ambiguity and potential disputes among partners. Having a partnership deed ensures clarity and provides a written record of the agreed-upon terms.

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