Partnership deed: meaning, contents and registration
A partnership deed is the written agreement between partners of a firm under the Indian Partnership Act, 1932. Registration is optional but useful.
Short answer
A partnership deed is the written agreement between the partners of a partnership firm, setting out capital, profit sharing, duties, and the rules for admission, retirement and dissolution. It is governed by the Indian Partnership Act, 1932. Registration of the firm with the state Registrar of Firms is optional, but an unregistered firm faces restrictions on suing third parties.
- Law
- Indian Partnership Act, 1932
- Maximum partners
- 50, under the Companies Act rules
- Registration
- Optional, with the state Registrar of Firms
- Liability
- Unlimited, joint and several
What a partnership deed contains
A partnership can technically be formed orally, but a written deed is needed for bank accounts, PAN, GST registration and tax assessment. A typical deed includes these terms, and the Act's default rules apply to anything it leaves out.
- Name and principal place of business of the firm
- Names and addresses of partners
- Capital contribution and interest on capital
- Profit-sharing ratio
- Salary or remuneration to working partners
- Admission, retirement and death of partners
- Duration and dissolution terms
Registration and its effect
A firm is registered by filing an application with the Registrar of Firms of the state, with the prescribed fee and a copy of the deed. Under section 69 of the Act, an unregistered firm cannot sue a third party to enforce a contract, and a partner cannot sue the firm or co-partners, though third parties can still sue the firm. The deed must be stamped according to the state stamp law, which usually depends on the capital contributed.
Why it matters for founders
Partners in a firm have unlimited liability, and each partner is bound by the acts of the others done in the course of business. For income tax, the deed must clearly state interest on capital and partners' remuneration for these to be allowed as deductions within the limits of the law. If you plan to raise outside capital, a firm can later convert into a private limited company.
Related services
Sources
Written by the Refogo Editorial Team from the official sources above and checked on 2026-10-31. Laws, rates and due dates change, and authorities often extend deadlines, so confirm your own case with a qualified professional. This is general information, not legal or tax advice. Read our editorial policy or report an error to support@refogo.com.
Common questions
Is a partnership deed compulsory?
The Act allows oral partnerships, but in practice banks and tax authorities require a written deed.
What happens if a partnership firm is not registered?
It cannot sue third parties to enforce contracts, and partners cannot sue each other or the firm, which weakens legal remedies.
How many partners can a firm have?
Up to 50, as prescribed under section 464 of the Companies Act read with the related rules.