For Partnership Firm in India, there is no minimum capital requirement, unlike Private Limited Company. You just need capital to maintain a current bank account balance.
Partnership firm registration is not mandatory in India .However if partner’s wishes to register its firm then the following documents are required:-
A partnership firm and an LLP are taxed at a flat rate of 30 % (excluding applicable surcharge and cess (tax levied for a specific purpose)) on their income. Thereafter, the share of profit that a partner takes out from the partnership firm or an LLP is exempt in the hands of the partner (including the partners based overseas, subject to double taxation avoidance agreements). The income (other than profits) earned by a partner is assessed and taxed as if the partner is self-employed and not an employee of an organization.
The Income Tax Act 1961 provides that partnership firms and LLPs involved in a profession with gross receipts of more than ₹50lakhs and those involved in doing business and having sales turnover exceeding ₹100lakhs are required to have a tax audit. The details of the partners of a registered partnership firm and an LLP are available for the public to inspect.
The benefits of registering a partnership firm are as follows :
Any individual or body corporate can become a partner provided that the individual has:
Further, a foreign entity can be a partner in an LLP and make an investment only in sectors where 100% FDI is allowed in terms of the extent FDI policy
In terms of the Act, a partnership firm may be dissolved with the consent of all the partners or in accordance with the contract between the partners. In terms of the LLP Act, an LLP shall be dissolved as contractually agreed by the partners.
The partners are the agents of the firm. Hence, the partnerships can sue a partner for any loss incurred due to willful neglect or fraud of the partner and they are required to indemnify the partnerships.
In terms of the Act, the partners are jointly and severally liable for all acts of the firm. In terms of the LLP Act, if a partner has acted fraudulently without the knowledge of the LLP, then, without prejudice to any criminal proceedings that may arise under any law for the time being in force, the LLP and any such partner or designated partner is liable to pay compensation to any person (including the partners of the LLP) who has suffered any loss or damage by reason of such conduct.
The time taken to issue a certificate of incorporation may vary as per the regulations of the concerned state. The registration of Partnership Firm is subject to Government processing time which varies for each State.
Often, if the partnership agreement is not registered, the court may deem a partnership invalid. If the object of the business is illegal, the court may consider the partnership invalid and dissolve the partnership.
If the partners of a firm wish to end the partnership, they can do so by dissolving the partnership by notice, if it is a partnership of will. A partnership can be dissolved in accordance with the terms laid out in the Partnership Deed, or they can do so creating a separate agreement.
In a certain sense, a partnership certification of incorporation can be revoked, this often termed as dissolution. Dissolution can be brought upon automatically when all partners or all partners except one partner are declared insolvent or if the firm is carrying unlawful activities, i.e. like trading in drugs or other illegal products, corporate malpractice or making business engagements with countries that may harm the interest of India.
Every partner is jointly liable with all the other partners and also individually, for all acts/activities of the firm, during the course of business while he/she is a partner. This means that if a loss or injury is caused to any third party or a penalty is levied during the course of business all partners will be held liable even if the injury or loss was caused by one of the partners.