Partnership Firm Registration

The business own, run and managed by the two or more partners, then such type of entity is known as partnership firm. The registration under this entity is also optional.  There is separate PAN card required apart from the partners of the firm and the liability of the partners is unlimited. It should ideally only be considered by small merchants and traders when run by two or more partners. In partnership firm there should be at least two persons coming together to form the partnership for a common goal. In other words, the minimum number of partners in a partnership firm can be two.

Indian Partnership Act, 1932 has put no limitation on maximum numbers of partners in a firm. But however, Indian Companies Act, 2013 puts a limit on a number of the partners in a firm as follow:

Partnership Firm Registration :-

The registration of Partnership firm is a Process of giving the firm a status of the Registered Legal entity in India. For Partnership Registration, you should search a firm name and after that build up an deed for the partners. It is a record expressing particular rights and commitments of the accomplices and to be legitimate it ought to be composed and not oral. The terms that are laid out in  Partnership Deed can be fluctuated to suit the interests of the accomplices and can even be influenced in opposition to the Indian Partnership To act, 1932 however in the event that the Partnership Deed is quiet on any point, at that point the arrangements of the Partnership Act, 1932 would apply.

Process of Registration :-
Annual Compliance :
Tax Rate :

The partnership firm is liable to pay income tax @ 30 percent of its net income. An additional surcharge @12 percent will be payable when the income exceeds 1 crore. In addition to the income tax and surcharge, a partnership firm must pay education cess and secondary higher education cess as per the applicable rate on both tax as well as surcharge. At present education Cess is 3% and Secondary and higher education cess is 1%.

Income Tax Calculation for Partnership Firm

While calculating the income tax applicable for a partnership firm, it is important to note that the following types of expenses paid by the partnership firm to the partners are not allowed as deductions:

Income Tax Return Filing :

Partnership firms are required to file income tax return in form ITR 5. Like all other income tax forms, ITR 5 is an attachment less form and there is no requirement for submitting any documents or statements along with a partnership firm tax return. However, the taxpayer must save all records pertaining to the business and produce the same before tax authorities when requested. If the income tax return is filed online, then a class 3 digital signature will be required for the Partner of the firm. Also, online income tax return filing is mandatory for partnership firms required to obtain an audit.

Partnership Firm Tax Return Due Date :

The due date for filing of Income tax return  for partnership firms is July 31 of the assessment year. Partnership firms required to get its accounts audited under the income tax Act must file the income tax return before the 30th September.

Audit Requirement for Partnership Firms :
Treatment of income in the hands of Partners :

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