You are currently viewing Partnership Deed in India

Partnership Deed in India


Partnership Deed in India

A formal written agreement between two parties detailing their purpose to conduct business together and divide profits and losses is known as a partnership deed. It is also known as a cooperation agreement. For the convenience of the interested readers, we review the major components of the partnership deed in this blog.

How to make a partnership deed?

In India, the two most common types of business organizations are partnerships and proprietorships. Because they are relatively simple to start up and have fewer regulatory compliance requirements than limited liability partnerships (LLPs) and companies, these two types of organizations are very popular.

Choosing a Partnership Firm Name

The following guidelines apply; however, the partners are allowed to choose any name they like for their partnership firm.

  1. To avoid creating confusion, the names must not be too similar or identical to those of other businesses in the same industry. This law exists because a new firm using an affiliated name could harm an existing firm’s reputation or goodwill.
  2. Unless the State Government expressly consents in writing to the use of such words as part of the firm name, the name must not contain words like Crown, Emperor, Empress, Empire or phrases expressing or indicating the permission, approval, or patronage of the government [Section 58(3)].

How to create a Partnership Deed?

A partnership deed is the legal instrument that specifies the rights and obligations of each partner in a partnership.

An oral or written partnership deed arrangement is possible. The partnership agreement should be in writing because, in practise, an oral agreement has no significance for tax purposes. The following are a partnership deed’s fundamental qualities:

  • The firm’s name, address, and a list of all the partners
  • Type of business to be conducted
  • The date that business operations began
  • Partnership duration (whether for a specific project or time frame)
  • Each partner contributes capital
  • The partners’ share of the profits

All partnership deeds must include the aforementioned minimum requirements. Any additional provisions may be mentioned by the partners. Below are a few examples of additional clauses that could be included in the partnership deed:

  • Interest on Partners’loan, interest on partners’capital, and interest, if any, to be charged on drawings
  • Any wages, commissions, or other payments due to partners
  • Account preparation process and audit planning
  • The division of labor and accountability, or the responsibilities, rights, and obligations of each partner
  • Guidelines to follow in cases of retirement, death, and partner admittance

Each partner should have a copy of the partnership deed, which should be written by the partners on stamp paper in accordance with the Indian Stamp Act. If the firm is being registered, a copy of the partnership agreement should also be submitted to the Registrar of Firms.

How to register a Partnership Firm in India

The Indian Partnership Act, 1932 governs partnerships in India. According to the Partnership Act, registration of partnership firms is totally up to the partners’ discretion. The Partners’ Partnership Agreement may or may not be registered.

However, they might not be able to take use of the advantages that a registered partnership firm has if the partnership deed is not registered.

Before beginning a business or at any moment after beginning a partnership, a partnership firm may be registered. However, registration must be completed prior to filing the case if the firm plans to use it to enforce rights resulting from the contract in court.

In India, registering a partnership firm is a pretty simple process. The Registrar of Firms of the State where the company is located must receive an application together with the requisite fees. Additionally, the following paperwork must be presented with the application:

  1. Form No. 1 Partnership Registration Application
  2. Affidavit specimen properly completed
  3. A verified copy of the partnership agreement
  4. A rental or lease agreement for the primary place of business, or ownership documentation
  1. All of the partners, or their specially authorized agents, must sign the application or statement. The registrar will record an entry of statement in a registry known as Register of Firms and issue Certificate of Registration whenever he is satisfied with the points indicated in the partnership deed (Sec 59).
  2. Detailed and current information about every registered firm is available in the Register of Firms kept at the Registrar’s office. Upon payment of the required fees, anyone may inspect this Register of Firms (Sec 66).
  3. Anyone who is interested in seeing the information about any firm may request the Registrar of Firms for it, and upon payment of the required costs, the applicant will receive a copy of all the information about any firm registered with the Registrar.
  4. It should be noted, however, that registration with the Income Tax Dept. differs from registration with the Registrar of Firms. All businesses are required to register with the Income Tax Department and have a PAN card.

Following the acquisition of a PAN Card, the Partnership Firm would be required to open a current account in its own name and conduct all of its business through this bank account.

Partnership agreement deed

A sample format of the partnership agreement deed is provided hereunder:

A partnership deed is a written legal document that two people who resolve to manage a business jointly, regardless of any profits or losses, must sign. A partnership deed can help ensure that the parties don’t argue or fight over the rules of the partnership. The partnership added is registered under the Partnership Act of 1932 and is also referred to as a partnership agreement. If the partners so choose, they may alter the provisions of the partnership document.

Executing a Partnership Deed

A nonjudicial stamp paper having a value of at least Rs. 100 must be used to print a partnership agreement depending on the amount of the assets held by the partnership firm. Each partner would keep a signed original for their records, and the partnership agreement is often signed with all of the partners present. Each partner keeps a duplicate or three copies of the signed partnership deed once it has been witnessed and signed by all partners.

A sample format of “Deed of Partnership” is provided hereunder:

Partnership deed word format

A sample word format of a partnership deed is provided hereunder:

Deed of Partnership

This deed of partnership is made on [Date, Month, Year] between:

  1. [First Partner’s Name], [Son/Daughter] of [Mr. Father’s Name], residing at [Address Line 1, Address Line 2, City, State, Pin Code] hereinafter referred to as FIRST PARTNER.
  2. [Second Partner’s Name], [Son/Daughter] of [Mr. Father’s Name], residing at [Address Line 1, Address Line 2, City, State, Pin Code] hereinafter referred to as SECOND PARTNER.
  3. [Third Partner’s Name], [Son/Daughter] of [Mr. Father’s Name], residing at [Address Line 1, Address Line 2, City, State, Pin Code] hereinafter referred to as THIRD PARTNER.
  4. [Fourth Partner’s Name], [Son/Daughter] of [Mr. Father’s Name], residing at [Address Line 1, Address Line 2, City, State, Pin Code] hereinafter referred to as FOURTH PARTNER.

Whereas the parties to this agreement have agreed to start their firm as a partnership, and a written instrument of partnership is advisable. Now the following is attested to by this partnership deed:


The parties in this agreement have mutually decided to conduct the business of [Proposed Business Activity Description].


The partnership’s primary location will be at [Address Line 1, Address Line 2, City, State, Pin Code].


The partnership’s duration is flexible.


The firm’s initial capitalization will be Rs. [Total Partners’ Contribution].


All partners will get an equal share of the firm’s profit or loss, which will be sent to each partner’s current account.


The managing partner of the firm will be the [First Partner], who will oversee all daily business operations and any legal actions taken on behalf of the firm. The other partners will work with him to carry out this responsibility.


The business must open a current account at any bank in the name of [Partnership Firm Name]; this account must be managed jointly as stated to the banks from time to time by [First Partner] and [Second Partner].


To get credit facilities from any financial institution, the partnership will need the written approval of each Partner.


The firms must routinely keep property books of account, which are often kept at the firm’s place of business, which include true and correct records of all their transactions as well as all of their assets and liabilities. The balance sheet must be thoroughly audited and signed by all partners before the accounting year, which begins on April 1, becomes the financial year. Each Partner is entitled to access the books and the opportunity to confirm their accuracy.


If any partner decides to leave the company at any point while the partnership is still in existence, he or she is permitted to do so as long as he or she gives the other partners at least one calendar month’s notice. The retiring partner or his legal representatives must receive payment from the surviving partner for the purchase price of their portion of the company’s assets.


In the case that one or more partners pass away, one of their legal representatives automatically joins the company as a partner. If the legal representation decides not to join, they will still get a portion of the purchase price computed as of the partner’s passing date.


Every time there is a disagreement or dispute between the partners, the partners must refer it to a single arbitrator. The Indian Arbitration Act, which is now in effect, shall regulate such arbitration proceedings and shall be final and binding on all parties.

This partnership agreement has been signed, sealed, and delivered at [City, State] on [Day, Month, Year] in witness thereto.

FIRST PARTNER                                                           SECOND PARTNER

[Address Line 1]                                                               [Address Line 1] [Address Line 2]                                                               [Address Line 2] [City, State, Pin Code]                                                     [City, State, Pin Code]

THIRD PARTNER                                                          FOURTH PARTNER

[Address Line 1]                                                               [Address Line 1] [Address Line 2]                                                               [Address Line 2] [City, State, Pin Code]                                                     [City, State, Pin Code]

WITNESS ONE                                                               WITNESS TWO

[Address Line 1]                                                               [Address Line 1] [Address Line 2]                                                               [Address Line 2] [City, State, Pin Code]           [City, State, Pin Code]


An agreement outlining the terms and conditions of a partnership between partners is known as a partnership deed. One of the most common forms of businesses to launch is a partnership firm.

Clear communication between partners about the numerous rules regulating their partnership is necessary for the efficient and effective operation of a partnership firm. The partnership deed accomplishes this. In order to provide the partners with clarity, it stipulates a number of terms, including profit-and-loss sharing, remuneration, interest on capital, drawings, admission of a new partner, etc.

Partnership deed between two partners

A sample deed of partnership between two partners is provided hereunder:


This partnership agreement is made between……….. on this……… of……….. son of………. living in……….of the one portion and………. son of……… dwelling in the other part at……….

This deed witnesseth and the parties hereby agree as follows:

  1. The parties hereto shall carry on business in co-partnership as manufacturer and trader of jute goods under the name and style of …………………………….Brothers at………with effect from…………until the expiration of …………………months’ notice in writing to determine the partnership left by either party for the other at the place of business of the firm, at any time after the…………day of…………subject to the terms and conditions hereunder contained and subject to such change in the constitution of the firm, if any, hereafter effected by addition, withdrawal, retirement or expulsion of partner or partners.
  2. The firm must register under both the Income Tax Act and the Indian Partnership Act within………days of the business’s launch, and the rules outlined in both acts must be followed by the firm.
  3. The name of the business will be “Eastern Law House,” although the partners may later choose a different name if they so choose.
  4. The firm’s operations will currently take place at………., etc., or any other location(s) that the partners may later choose on a case-by-case basis.
  5. An amount of Rs. shall currently make up the firm’s capital. to be paid shortly after the performance of these presents and to be contributed by the partners in equal amounts. Each partner is entitled to interest at the rate of………% per year on the capital that is recorded to his credit in the firm’s books. This interest is cumulative, so any shortfall for any given year will be made up from the profits of the succeeding year or years, with the exception of when the firm experiences a loss.
  6. If any partner is required to advance any additional funds beyond the percentage of capital he has agreed to provide or chooses to keep his share of net profits undrawn at any annual general accounting, he will also be entitled to interest thereon at the rate of………% per year, unless the other partner or partners require him to do so, in which case the interest will stop accruing.
  7. All business costs and expenses must be covered by the capital and profits of the company, or, in the event of a shortfall, by the partners in equal parts.
  8. Messrs…………….., etc., or such other bankers as the partners may from time to time mutually agree upon, shall serve as the firm’s bankers. All funds, checks, and other securities belonging to the firm, excluding those needed for immediate expenses, must be paid into or deposited with the aforementioned bank.
  9. Every check issued for an amount greater than Rs. Each partner has the ability to sign any additional checks written in the firm’s name separately. Both partners must sign all bills and other papers that are necessary for the firm.
  10. The partners shall bear equal responsibility for and ownership of the earnings and losses.
  11. In the case that the partners unanimously or by a majority vote decide to enhance the capital, the additional capital, unless otherwise agreed, shall be contributed by equal shares.
  12. Partners may agree to draw out a certain amount, up to a maximum of Rs……… per month, in advance; however, if general accounts are taken at the end of any year and it is discovered that one of the partners has drawn out more money than his share of the profits for that year, the excess must be immediately returned.
  13. Each partner shall actively attend to the partnership’s business and conduct it so as to maximize the benefits to the partners. Neither partner shall be directly or indirectly involved in any trade or business other than the partnership.
  14. Partners must promptly settle all of their individual debts and obligations, as well as indemnify and maintain the firm’s effective indemnification against them.
  15. No partner shall, without the consent in writing of the other partner or partners for the time being, release or compound any claim or debt due or owing to the firm or otherwise compound or settle the same or diminish any security without receiving the full amount thereof, or lend any money or deliver on credit goods belonging to, or otherwise give credit on behalf of, the firm other than in the usual course of the business of the firm, or contract debts and liabilities exceeding Rs……….or institute suits or proceedings or make himself liable as surety for any person, or sell, transfer or assign or otherwise deal with either absolutely or by way of mortgage or declaration of trust, his share or interest in the firm, or the profits and/or benefits thereof except in favor of another partner or do, execute or perform or suffer to the contrary any act, deed or thing whereby the property of the firm may be exposed to the danger of being seized, attached or taken in execution, when and in such an event he shall be liable to be expelled from the partnership, if so decided by the then majority of partners, who may in the alternative file a suit for dissolution of the firm with all consequential reliefs.
  16. The partners are required to keep and update accurate books of accounts. Each partner or his agent may see the books of account, securities, vouchers, etc., at any reasonable time, and copies may be made. These records must be preserved at the location of the firm.
  17. On the ……… day of……… and on that day of every succeeding year, during the continuance of the partnership, a general account of the preceding year shall be taken and a just valuation made of all the assets and liabilities of the firm; such general account shall be audited by such registered accountant as the partners shall from time to time mutually appoint, and shall be entered in a book and signed by both the partners, and when so signed, the entries in such book shall be binding on both, provided that, if within-months from the date of the signing of the book any manifest error shall be found therein, such error, shall be rectified. All profits (after setting apart an amount equivalent to ……… % thereof as Reserve Fund to meet emergent expenses) and loss shall be divided as aforesaid after such signature.
  18. When a partner dies, retires, or becomes bankrupt, the partnership does not automatically dissolve; instead, it is wound up and its assets and obligations are handled in line with the Indian Partnership Act.
  19. The other partner may immediately dissolve the partnership by notice in writing, may subsequently carry on the business alone, may publish notice of the dissolution in the local Official Gazette and in the vernacular newspaper, and may also inform the Registrar of Firms in writing. This option is available if any partner violates any provision of the partnership agreement, goes insane, or is declared insolvent.
  20. Upon the dissolution of the firm either by death of a partner or by notice under cl. (19) the other partner may purchase his shares in the effects at a valuation to be made by arbitrators or their umpire as hereinafter mentioned. The price, when ascertained, shall be paid by three (or etc.) equal installments at the end of four, eight and twelve calendar months (or, etc.), from such date of the award by the continuing partner or purchaser, who shall also execute all deeds and things necessary for indemnifying the outgoing partner or his estate from all the liabilities of the firm; and the outgoing partner or his representatives shall execute all such deeds and documents and do all acts necessary for effectually vesting in the purchaser the share purchased, including the goodwill, and the outgoing partner shall not carry on, or be engaged in any business competing with or interfering with the business of the firm, within a radius of………miles of, etc., during the remainder of the term of the said partnership term.
  21. Any notices required to be given to either partner under this agreement will be deemed to have been properly served if they are sent by registered mail to the partner’s address at the firm.
  22. Any dispute or difference which may arise between the partners or their representatives, with regard to the construction, meaning and effect of this deed or any part thereof, or respecting the accounts, profits or losses of the business, or the rights and liabilities of the partners under this deed, or the dissolution or winding up of the business, or any other matter relating to the firm, shall be referred to arbitration and the decision of a sole arbitrator, if the parties in dispute so agree, otherwise to two or more arbitrators, according to the number of the partners of the firm one to be nominated by each party or his representative and in case of difference of opinion between them, by the umpire selected by them at the commencement of the reference and this clause shall be deemed to be a submission within the meaning of the Arbitration and Conciliation Act 1996 including its statutory modification and re-enactment.

In witness whereof the parties hereto have executed these presents on the day, month and year first above-written.

Signed, sealed and delivered by ………………………….. in the presence of:

Signed, sealed and delivered by ………………………………in the presence of:


Features of Partnership Business

  • A partnership business must have at least two members.
  • Banking Business Partnership, with a maximum of 10 members.
  • Nonbanking business partnership with a member cap of 20 or less.
  • Because partners can form a partnership with any amount of capital they choose, there is no set minimum capital requirement.
  • Before launching a company, partners should have a mutual understanding.
  • Prior to the partnership document being signed, the ratio of profit to loss should be determined.
  • Each partner or active member is accountable for the actions of other partners or active members.
  • If you register your business as partnership entity, an auditor is not necessary.

Documents Required

  • Form Number 1 (For registration under Partnership Act)
  • A signed original by each partner on the partnership agreement
  • An affidavit stating a person’s desire in becoming a partner
  • Lease or rental agreement for the property
  • According to the Indian Partnership Act, 1932, which governs partnerships in India, all currently operating partnership firms are registered. All of the partners must sign and date the partnership deed after registering as a partnership firm. An adult over the age of 18 who is not one of the partners or members must witness this signed paper (excluding spouses or family members of any partner). Each and every partner of the company should maintain a copy of the partnership agreement. The obligations and responsibilities of each partner are guaranteed by this agreement. It aids in avoiding unnecessary miscommunication, harassment, or conflict between the partners.

Although it is not required, forming a partnership firm has many benefits, including aiding in the understanding of duties, investments, profit and loss ratios, and legal and written documentation. Additionally, it will be useful for any court proceedings or other legal requirements. Given everything we’ve said so far about partnership deeds, we think anyone looking to join a partnership firm will find this blog to be educational and helpful


Kanakkupillai is your reliable partner for every step of your business journey in India. We offer reasonable and expert assistance to ensure legal compliance, covering business registration, tax compliance, accounting and bookkeeping, and intellectual property protection. Let us help you navigate the complex legal and regulatory requirements so you can focus on growing your business. Contact us today to learn more.