Partnership firm registration in India means filing a statement, signed by every partner, with the Registrar of Firms for the area where the firm does business, under section 58 of the Indian Partnership Act, 1932. Registration is optional, and the central Act allows it at any time (Maharashtra sets a one-year window), but until a firm is registered it cannot sue a third party to enforce a contract. A firm needs at least two partners and can have no more than 50.
Registered vs unregistered partnership firm: what is the difference?
An unregistered firm is legal, but section 69 takes away its right to go to court on its contracts. It cannot sue a customer or supplier, and a partner cannot sue the firm or the other partners to enforce the deed. A registered firm keeps those rights, and the certified register entry proves who its partners are.
| Point | Registered firm | Unregistered firm |
|---|---|---|
| Suing a third party on a contract | Allowed | Barred (section 69(2)) |
| Partner suing the firm or co-partners under the deed | Allowed, if shown in the register | Barred (section 69(1)) |
| Suing to dissolve the firm or for accounts of a dissolved firm | Allowed | Allowed (section 69(3)) |
| Bank account KYC | Registration certificate is on RBI's list of documents | Opened as an unincorporated association |
| DPIIT startup recognition | Can apply, if other conditions are met | Cannot apply |
Banks follow the RBI's Know Your Customer Directions, 2025, which list the registration certificate, the partnership deed and the firm's PAN among the documents for a partnership firm's account. DPIIT's startup definition of 4 February 2026 (G.S.R. 108(E)) covers only a firm registered under section 59. The bar in section 69 also covers a set-off claimed in a suit, so registering before a dispute starts matters.
Partner limits, minors and NRI partners
A partnership needs at least two persons who agree to share the profits of a business run by all or any of them acting for all (section 4). The ceiling is 50: rule 10 of the Companies (Miscellaneous) Rules, 2014 bars any partnership of more than 50 persons formed to carry on business for gain unless it is registered as a company or formed under another law.
- Minors. A minor cannot be a partner, but with the consent of all partners can be admitted to the benefits of partnership (section 30). The minor's share is liable for the firm's acts; the minor is not personally liable.
- Family business. Members of a Hindu undivided family running a family business are not partners merely by status (section 5). A partnership arises only from a contract.
- NRIs and OCIs. They can contribute to a firm's capital on a non-repatriation basis, if the firm is not in agriculture or plantation, print media or real estate business (RBI Master Direction on foreign investment, Annex 4). The money and any gains on it cannot be taken out of India.
What should a partnership deed contain?
The deed should state at least what the registration statement asks for: the firm name, the principal and other places of business, each partner's name, address and joining date, and the firm's duration. For tax, it should also authorise any partner remuneration and set the rate of interest on capital, or those payments are not deductible.
Section 58(3) bars firm names using words such as "Crown", "Emperor", "Empire", "Imperial", "King", "Queen" or "Royal", or words implying government approval, unless the state government consents in writing. Beyond that, a good deed records:
- each partner's capital and whether it comes in cash or property;
- the profit-sharing ratio, which working partners draw remuneration, and interest on capital (deductible up to 12% a year);
- banking authority, admission and retirement of partners, and what happens on a partner's death;
- how disputes are settled and how the firm is dissolved.
The deed pays stamp duty under the state's stamp law. In Maharashtra, Article 47 of the Stamp Act charges ₹500 where cash contribution is up to ₹50,000 and 1% of the whole contribution above that, capped at ₹50,000. A deed with ₹1,20,000 of cash capital pays ₹1,200 there.
How to register a partnership firm: the process
Registration has four stages: a signed and stamped deed, the firm's PAN, the statement to the Registrar of Firms with the state's fee, and the Registrar's entry in the Register of Firms. Each state appoints its own Registrars and sets its own forms and fees by rules under sections 57 and 71.
People often call this partnership deed registration, but the Registrar records the firm's statement, not the deed itself (section 59). Maharashtra's version of section 58 also asks for a true copy of the deed with the statement.
- Sign and stamp the deed. All partners sign the deed on paper of the right stamp value for the state where it is executed.
- Get the firm's PAN. The firm has its own PAN, separate from the partners'. Banks ask for it, and Maharashtra's 2026 amendment adds it to the registration statement.
- File the statement. Send the statement in the state's prescribed form (Form A in Maharashtra) to the Registrar for the area of any place of business, with the fee. Every partner, or an agent specially authorised by them, signs and verifies it (section 58(1) and (2)).
- Registration. When satisfied, the Registrar records the statement in the Register of Firms and files it (section 59). In Maharashtra the Registrar then issues a certificate in Form H.
Later changes are reported the same way: a new name or principal place of business (section 60), a branch opened or closed (section 61), a partner's new name or address (section 62), and partners joining or leaving or the firm dissolving (section 63). Making a false or incomplete statement is punishable with up to three months' imprisonment, a fine or both (section 70), and up to one year in Maharashtra.
How is a partnership firm taxed?
A firm pays income tax at 30% on its profit, plus 4% cess, which is 31.2%, rising to 34.944% when income exceeds ₹1 crore because of a 12% surcharge. Each partner's share of the firm's profit is exempt in the partner's hands, because the firm has already paid tax on it.
Two tax points depend on the deed and the type of firm:
- Remuneration and interest. Under section 35(e) of the Income-tax Act 2025 (section 40(b) of the 1961 Act), the firm can deduct remuneration only to working partners, only as the deed authorises, and only within a limit linked to book profit. Interest to partners must also be authorised by the deed and is deductible up to 12% simple interest a year.
- Presumptive scheme. A resident firm, unlike an LLP, can declare profit under section 58 of the 2025 Act (section 44AD of the 1961 Act) if turnover is up to ₹2 crore, or ₹3 crore when cash receipts are 5% or less of turnover.
To compare the firm with an LLP or company at your own profit, use the business tax comparison calculator.
Partnership firm or LLP?
Choose an LLP if the partners want limited liability; choose a firm if they want the fewest filings. In a firm every partner is liable jointly and severally for the firm's acts (section 25), while an LLP partner's exposure is limited. An LLP files with the MCA every year; a firm has no ROC filings.
A firm can later convert into an LLP under section 55 and the Second Schedule of the LLP Act, through the same FiLLiP form used to incorporate, as long as the LLP's partners are all the firm's partners and no one else. If you are unsure which suits you, the business structure finder compares the options, and our LLP registration page explains that route.
What changed in 2025 and 2026
Maharashtra's legislature passed the Indian Partnership (Maharashtra Amendment) Bill, 2026 on 12 and 13 March 2026. It moves registration online: the statement, fee and a true copy of the deed go on an official website, and every partner signs digitally. It takes effect only from a date the state notifies.
Other changes that touch partnership firms:
- From 1 April 2026, the Income-tax Act 2025 replaced the 1961 Act, so the remuneration and presumptive rules now sit in sections 35(e) and 58.
- DPIIT's notification of 4 February 2026 lists registered partnership firms among the entities that can be recognised as startups.
- Online registration already exists elsewhere: Uttarakhand amended section 58 for online filing with digital signatures in 2019.
For Maharashtra's Registrar of Firms, fees and stamp duty, see partnership firm registration in Mumbai.
How Ofin registers your partnership firm
Ofin's partnership firm registration starts at ₹4,999. It covers drafting the partnership deed, registration of the firm, the PAN application, GST registration and help opening the bank account. CAs, CSs and legal professionals prepare and check each document, the work is 100% online, and we reply within 24 hours. Get a fixed-price proposal.
