Partnership Firm Compliance — Tax & Regulatory | Savlana Init

Business Compliance · Partnership Firm

Partnership Compliance — Assessed. Filed. Current.

Partnership firms have distinct income tax, GST, and regulatory compliance obligations — we file ITR-5, handle GST returns, draft deed amendments, and manage your firm's annual compliance calendar.

A partnership firm is taxed as a separate assessable entity at a flat rate of 30% plus applicable surcharge and cess under the Income Tax Act. Partners' shares of the firm's profit are exempt in their own hands under Section 10(2A), but the firm itself must file an annual income tax return in ITR-5. The firm's deductible remuneration and interest to partners are governed by the strict conditions of Section 40(b) — conditions that must be built into the partnership deed and honoured in the accounts, or the deduction is disallowed.

Beyond income tax, partnership firms with taxable turnover must register for GST and file monthly or quarterly GSTR returns, in addition to GSTR-9 annual returns. Firms engaged in professional services may also need to deduct and deposit TDS. If the firm is registered with the Registrar of Firms, any changes in the partnership — new partners, reconstitution, change in profit-sharing ratios — must be filed with the ROF as an amendment to the registered deed.

We provide end-to-end compliance support for partnership firms: ITR-5 filing with complete income computation, partner remuneration and interest working, GST return filing, partnership deed drafting and amendment, and ROF registration and filings. We also advise on reconstitution, dissolution, and conversion of the firm to an LLP or company.

Our Partnership Compliance Services

ITR-5 Filing

Preparation and filing of the partnership firm's income tax return (ITR-5), including income computation, partner remuneration and interest workings under Section 40(b), and tax payment.

GST Registration and Returns

GST registration for the firm and ongoing filing of GSTR-1, GSTR-3B, and GSTR-9 (annual return) as applicable.

Partnership Deed Drafting

Drafting of a new partnership deed with legally sound provisions for profit-sharing, partner remuneration, interest, capital, and dispute resolution.

Deed Amendment Filing

Preparation of the deed of amendment and ROF filing for changes in partners, profit-sharing ratios, capital contribution, or other material terms.

ROF Registration

Registration of the partnership firm with the Registrar of Firms under the Indian Partnership Act, 1932, enabling the firm to sue to enforce its rights.

TDS Compliance

Computation, deduction, and deposit of TDS by the firm on eligible payments — rent, professional fees, salaries — and filing of TDS returns.

Advance Tax Management

Computation and payment of quarterly advance tax instalments to avoid interest under Sections 234B and 234C.

Reconstitution and Dissolution

Legal documentation, deed drafting, and ROF filings for firm reconstitution on admission or exit of partners, or for voluntary dissolution.

Our Process

Compliance Assessment

We review the firm's current compliance status — ITR history, GST registration, ROF registration, and deed provisions — to identify gaps and plan the compliance calendar.

Accounts and Income Computation

The firm's profit and loss account is reviewed, partner remuneration and interest under Section 40(b) are computed, and the taxable income is determined.

ITR-5 Preparation and Filing

The ITR-5 return is prepared with all required schedules, tax is computed, and the return is filed on the income tax e-filing portal within the due date.

GST Return Filing

Monthly or quarterly GST returns (GSTR-1 and GSTR-3B) are filed, ITC reconciliation is performed, and GSTR-9 is filed annually.

Deed and ROF Compliance

Any required deed amendments are drafted, executed by all partners, and filed with the ROF within the prescribed period.

Why It Matters

✓ITR-5 filed with correct Section 40(b) remuneration and interest workings

✓GST registration and all GSTR returns filed within due dates

✓Partnership deed drafted with legally sound remuneration and interest clauses

✓Deed amendments for partner changes filed with ROF promptly

✓ROF registration for unregistered firms to enable enforcement of rights

✓TDS compliance — deduction, deposit, and quarterly return filings

✓Advance tax computed and paid on time to avoid penal interest

✓Reconstitution and dissolution documentation prepared and filed

Frequently Asked Questions

Registration with the Registrar of Firms is not compulsory under the Indian Partnership Act, 1932. However, an unregistered firm cannot file a suit against a third party or enforce a right arising out of a contract. Registration is strongly recommended for all firms intending to conduct significant business.

A partnership firm files ITR-5 every year. Firm profits are taxed at 30% (plus 12% surcharge on profits above INR 1 crore, and 4% health and education cess). Partners' shares of firm profits are then exempt in their hands under Section 10(2A).

Section 40(b) limits the deduction for partner remuneration and interest in the firm's income computation. Remuneration is deductible only if the partnership deed authorises it and the amount does not exceed the prescribed limits (INR 1.5 lakh or 90% of book profit, whichever is higher, for working partners). Interest is deductible at a maximum of 12% per annum. Excess amounts are disallowed.

For partnership firms not subject to audit, the ITR-5 due date is July 31. For firms subject to tax audit under Section 44AB (turnover above INR 1 crore for business or INR 50 lakh for profession), the due date is October 31.

Yes, if the firm's aggregate annual turnover exceeds the GST threshold — INR 40 lakh for goods (INR 20 lakh in special category states) and INR 20 lakh for services (INR 10 lakh in special category states). Registration is also mandatory for inter-state supplies regardless of turnover.

Admission or retirement of a partner requires an amendment to the partnership deed, executed by all continuing and incoming/outgoing partners. If the firm is registered, the amended deed must be filed with the Registrar of Firms. The change also has income tax implications — the firm's profits are allocated between pre- and post-change periods.

Need to file your partnership firm's ITR or manage its annual compliance?

We handle ITR-5, GST returns, deed amendments, ROF filings, and advance tax — complete partnership compliance managed by experienced CAs.