Partnership Firm / Deed Registration

The document in which the respective rights and obligations of the members of a partnership is written is called the Partnership Deed.

A partnership deed agreement may be written or oral. However, practically oral agreement does not have any value for tax purposes and therefore the partnership agreement should be written. The following are the essential characteristics of a partnership deed:-

Name and Address of the firm as well as all the partners
Nature of business to be carried on
Date of Commencement of business
Duration of Partnership (whether for a fixed period/project)
Capital contribution by each partner
Profit sharing ratio among the partners

The above are the minimum essentials which are required in all partnership deeds. The partners may also mention any additional clauses. Some of the examples of additional clauses which may be mentioned in the partnership deed are mentioned below:-

Interest on Partner’s Capital, Partners’ Loan, and Interest, if any, to be charged on drawings.
Salaries, Commissions etc, if any, payable to partners
Method of preparing accounts and arrangement for audit
Division of task and responsibility i.e. the duties, powers and obligations of all the partners.
Rules to be followed in case of retirement, death and admission of a partner.

How to register a Partnership Firm in India

Partnerships in India are governed by the Indian Partnership Act, 1932. As per the Partnership Act, Registration of Partnership Firms is optional and is entirely at the discretion of the partners. The Partners may or may not register their Partnership Agreement.

However, in case the partnership deed is not registered, they may not be able to enjoy the benefits which a registered partnership firm enjoys.

Recommended Read: Benefits of Registration of a Partnership Firm

Registration of Partnership Firm may be done before starting the business or anytime during the continuance of partnership. However, where the firm intends to file a case in the court to enforce rights arising from the contract, the registration should be done before filing the case.

The procedure for Registration of Partnership Firms in India is fairly simple. An application and the prescribed fees are required to be submitted to the Registrar of Firms of the State in which the firm is situated. The following documents are also required to be submitted along with the application:-

1. Application for Registration of Partnership in Form No.
2. Duly filled specimen of Affidavit
3. Certified True Copy of the Partnership Deed
4. Ownership proof of the principal place of business or rental/lease agreement thereof.

The application or statement must be signed by all the partners, or by their agents especially authorised in this behalf. When the registrar is satisfied with the points stated in the partnership deed, he shall record an entry of the statement in a register called the Register of Firms and issue a Certificate of Registration (Sec 59).

The Register of Firms maintained at the office of the Registrar contains complete and up-to-date information about each registered firm. This Register of Firms is open to inspection by any person on payment of the prescribed fees (Sec 66).

Any person interested in viewing the details of any firm can request the Registrar of Firms for the same and on payment of the prescribed fees, a copy of all details of with Firm registered with the Registrar would be given to the applicant

It should however be noted that registration with the Registrar of Firms is different from Registration with the Income Tax Deptt. It is mandatory for all firms to apply for Registration with the Income Tax Department and have a PAN Card.

After obtaining a PAN Card, the Partnership Firm would be required to open a Current Account in the name of the Partnership Firm and operate all its operations through this Bank Account.