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LegalIndiaIndian Partnership Act 1932 Compliant

Free Partnership Deed Template

Free Partnership Deed template format for India. Compliant with the Indian Partnership Act, 1932. Pro-grade boilerplate vetted by certified domain experts. Use it as a raw document, or automate it in Glomiq to eliminate manual copy-pasting.

Verified Compliance Document
Vetted by: Rajesh Kumar, FCA
GLOMIQ DRAFT
DEED OF PARTNERSHIP
THIS DEED OF PARTNERSHIP is made and executed at [CITY] on this [DAY] day of [MONTH], [YEAR] between:
1. [PARTNER_1_NAME], son/daughter of [FATHER_NAME], aged about [AGE] years, residing at [PARTNER_1_ADDRESS] (hereinafter referred to as the "First Partner").
2. [PARTNER_2_NAME], son/daughter of [FATHER_NAME], aged about [AGE] years, residing at [PARTNER_2_ADDRESS] (hereinafter referred to as the "Second Partner").
WHEREAS the parties hereto have agreed to commence and carry on a business in partnership under the name and style of "[FIRM_NAME]" and are desirous of reducing the terms and conditions of their partnership into writing.
NOW THIS DEED WITNESSETH AS FOLLOWS:
1. Name and Place of Business: The partnership business shall be carried on under the name and style of "[FIRM_NAME]". The principal place of business shall be situated at [FIRM_ADDRESS], or at such other place(s) as the partners may mutually decide.
2. Nature of Business: The business of the partnership firm shall be [BUSINESS_NATURE], and any other business as may be mutually agreed upon by the partners from time to time.
3. Commencement: The partnership shall be deemed to have commenced on [START_DATE] and shall be "Partnership at Will".
4. Capital Contribution & Profit Sharing: The initial capital of the firm shall be ₹[TOTAL_CAPITAL], and net profits/losses shall be shared in the following ratio:
| PARTNER | CAPITAL CONTRIBUTION | PROFIT SHARE |
|---|---|---|
| First Partner | ₹[CAPITAL_1] | [PERCENTAGE_1]% |
| Second Partner | ₹[CAPITAL_2] | [PERCENTAGE_2]% |
6. Remuneration to Partners: Both partners shall be working partners and shall be entitled to a monthly remuneration of ₹[REMUNERATION_AMOUNT], subject to the limits specified under Section 40(b) of the Income Tax Act, 1961.
7. Interest on Capital: Interest at the rate of [INTEREST_RATE]% per annum, or such other rate as prescribed under Section 40(b) of the Income Tax Act, 1961, shall be payable to the partners on the amount of capital standing to their credit.
8. Bank Account: Bank accounts in the name of the firm shall be opened with any scheduled bank and shall be operated jointly by both partners.
9. Accounts and Audit: The financial year of the firm shall be from 1st April to 31st March. Proper books of account shall be maintained at the principal place of business and shall be open for inspection by either partner.
10. Dissolution: The firm may be dissolved by mutual consent or by giving [NOTICE_PERIOD] month(s) written notice by either partner.
IN WITNESS WHEREOF, the parties hereto have set their hands on this Deed of Partnership on the day, month, and year first above written.
[PARTNER_1_NAME]
Signature: ______________________
[PARTNER_2_NAME]
Signature: ______________________
WITNESSES:
1. Name: _________________ Signature: _________________
2. Name: _________________ Signature: _________________

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Expert Drafting Guide & Clause Commentary

Compiled by Rajesh Kumar, FCA. Critical checkpoints before finalizing this document.

1Capital Contribution and Profit Sharing▼
Clause Context:

Specifies the investment ratio and profit/loss division.

Negotiating Tip:

Explicitly state that losses are also shared in the same ratio as profits to prevent ambiguity.

2Partner Remuneration & Section 40(b)▼
Clause Context:

Sets the salary/interest paid to partners, which is tax-deductible for the firm.

Negotiating Tip:

Use a dynamic clause that links remuneration to book profits, as per the maximum slabs allowed under Section 40(b).

3Dissolution Clause▼
Clause Context:

Defines how the partnership can be wound up or how partners can exit.

Negotiating Tip:

Include a buy-back clause enabling the remaining partner to buy the outgoing partner's share based on book value.

Compliance Watchouts

  • Register the partnership deed with the Registrar of Firms (ROF) to enable the firm to file suits against third parties.
  • State the interest on capital and salary limits clearly to claim deductions under Section 40(b) of the Income Tax Act.
R

Rajesh Kumar, FCA (Chartered Accountant & Tax Policy Expert)

Rajesh Kumar is a Fellow Chartered Accountant with 12+ years of experience in tax litigation, GST advisory, and corporate compliance audits. He advises SMBs and high-net-worth professionals on tax optimization strategies and regulatory compliance.

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