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Free Partnership Agreement Template for India
Establish a general partnership in India with a comprehensive partnership deed compliant with the Indian Partnership Act 1932. Our template covers capital contributions, profit-sharing ratios, decision-making authority, and dissolution procedures.
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PARTNERSHIP AGREEMENT
PARTNER 1
Amit Ramesh Sharma
12, Pali Hill Road, Bandra West, Mumbai - 400 050, Maharashtra
S/o Ramesh Prasad Sharma, PAN: ABCPS1234R
Phone: +91 98765 43210
Email: amit.sharma@email.com
S/o Ramesh Prasad Sharma, PAN: ABCPS1234R
Phone: +91 98765 43210
Email: amit.sharma@email.com
PARTNER 2
Sunita Vijay Patel
8, Juhu Tara Road, Juhu, Mumbai - 400 049, Maharashtra
S/o Vijay Govind Patel, PAN: ABCPP5678S
Phone: +91 98765 12340
Email: sunita.patel@email.com
S/o Vijay Govind Patel, PAN: ABCPP5678S
Phone: +91 98765 12340
Email: sunita.patel@email.com
Firm: Sharma and Patel Trading Co.
Commencement: 1 May 2026
This Partnership Agreement ("Deed") is made and entered into as of 1 May 2026 by and between Amit Ramesh Sharma ("Partner 1") and Sunita Vijay Patel ("Partner 2"), together referred to as the "Partners". The Partners agree to carry on business in partnership under the firm name Sharma and Patel Trading Co. ("Firm") upon the terms and conditions set out herein. This Deed is made in accordance with the Indian Partnership Act, 1932 ("IPA 1932"), the Indian Contract Act, 1872 ("ICA 1872"), and applicable provisions of the Income Tax Act, 1961 ("ITA 1961").
1.
FIRM NAME AND BUSINESS
The Partners shall carry on business under the firm name Sharma and Patel Trading Co. and such other trade names as the Partners may agree in writing. The nature of the business shall be:
Wholesale and retail trading in textiles, garments, and allied goods. The Firm may also carry on ancillary activities including import/export, distribution, and e-commerce of textile products.
The principal place of business shall be Shop No. 5, Linking Road, Bandra West, Mumbai - 400 050, Maharashtra. The Firm may open branches or carry on business at such other places as the Partners may unanimously agree (IPA 1932 s. 4).
Wholesale and retail trading in textiles, garments, and allied goods. The Firm may also carry on ancillary activities including import/export, distribution, and e-commerce of textile products.
The principal place of business shall be Shop No. 5, Linking Road, Bandra West, Mumbai - 400 050, Maharashtra. The Firm may open branches or carry on business at such other places as the Partners may unanimously agree (IPA 1932 s. 4).
2.
COMMENCEMENT AND DURATION
The partnership shall commence on 1 May 2026 and shall continue at will, continuing until dissolved by mutual consent or operation of law. The partnership shall be subject to dissolution as provided in this Deed and by law (IPA 1932 s. 40–44).
3.
CAPITAL CONTRIBUTIONS
The Partners shall contribute to the capital of the Firm as follows:
• Partner 1 (Amit Ramesh Sharma): INR 5,00,000.00 INR
• Partner 2 (Sunita Vijay Patel): INR 3,33,000.00 INR
Capital contributions shall be paid in full on or before the commencement date and shall be deposited into the Firm's bank account. No Partner may withdraw capital without the written consent of the other Partner(s). Additional capital may be introduced by mutual written agreement. The Firm's PAN shall be obtained from the Income Tax Department under ITA 1961 s. 139A.
• Partner 1 (Amit Ramesh Sharma): INR 5,00,000.00 INR
• Partner 2 (Sunita Vijay Patel): INR 3,33,000.00 INR
Capital contributions shall be paid in full on or before the commencement date and shall be deposited into the Firm's bank account. No Partner may withdraw capital without the written consent of the other Partner(s). Additional capital may be introduced by mutual written agreement. The Firm's PAN shall be obtained from the Income Tax Department under ITA 1961 s. 139A.
4.
PROFIT AND LOSS SHARING
The net profits and losses of the Firm shall be divided between the Partners in the following ratio:
• Partner 1 (Amit Ramesh Sharma): 60%
• Partner 2 (Sunita Vijay Patel): 40%
The profit and loss sharing ratio may be varied by unanimous written agreement of all Partners. For the purposes of ITA 1961, the Partners' income shall be computed and taxed in accordance with their respective shares. No Partner shall be entitled to any remuneration, commission, or share in the profits beyond what is provided in this Deed, unless otherwise agreed in writing (IPA 1932 s. 13).
• Partner 1 (Amit Ramesh Sharma): 60%
• Partner 2 (Sunita Vijay Patel): 40%
The profit and loss sharing ratio may be varied by unanimous written agreement of all Partners. For the purposes of ITA 1961, the Partners' income shall be computed and taxed in accordance with their respective shares. No Partner shall be entitled to any remuneration, commission, or share in the profits beyond what is provided in this Deed, unless otherwise agreed in writing (IPA 1932 s. 13).
5.
DUTIES AND OBLIGATIONS OF PARTNERS (IPA 1932 S. 9–17)
Each Partner shall: (a) be just and faithful to the Firm and to all other Partners (IPA 1932 s. 9); (b) carry on the business of the Firm to the greatest common advantage, and render true accounts and full information of all things affecting the Firm (IPA 1932 s. 9–10); (c) not engage in any business competing with the Firm without the prior written consent of all other Partners (IPA 1932 s. 16); (d) not use the Firm's property, name, or business connections for personal benefit (IPA 1932 s. 16); (e) indemnify the Firm for loss caused by wilful neglect in the conduct of the Firm's business (IPA 1932 s. 13(f)); and (f) devote such time and attention to the Firm's business as the Partners may mutually agree.
6.
MANAGEMENT, INTEREST AND REMUNERATION
Each Partner shall have equal right to participate in the management of the Firm's business. Major decisions (including incurring liabilities above INR 1,00,000, entering contracts with third parties, mortgaging firm property, or admitting new partners) shall require the written consent of all Partners (IPA 1932 s. 12). Routine day-to-day management may be carried on by any Partner acting within the ordinary course of business.
Additional agreed terms: Each Partner shall have equal right to participate in management. Decisions above INR 1,00,000 require written consent of both Partners. Interest on capital contributions shall accrue at the rate of 6% per annum and shall be credited to each Partner's capital account before division of profits (IPA 1932 s. 13(c); ITA 1961 s. 40(b) — deductible up to 12% p.a.). Interest on drawings made by Partners shall be charged at the rate of 6% per annum and shall be debited to the drawing Partner's capital account (IPA 1932 s. 13(d)). Each working Partner shall be entitled to a monthly salary of INR 25,000.00 INR as remuneration for services rendered to the Firm, subject to availability of profits and the limits prescribed under ITA 1961 s. 40(b). Remuneration shall not be paid to non-working Partners.
Banking: Current account with HDFC Bank, Bandra Branch — joint signatories for all cheques.
Additional agreed terms: Each Partner shall have equal right to participate in management. Decisions above INR 1,00,000 require written consent of both Partners. Interest on capital contributions shall accrue at the rate of 6% per annum and shall be credited to each Partner's capital account before division of profits (IPA 1932 s. 13(c); ITA 1961 s. 40(b) — deductible up to 12% p.a.). Interest on drawings made by Partners shall be charged at the rate of 6% per annum and shall be debited to the drawing Partner's capital account (IPA 1932 s. 13(d)). Each working Partner shall be entitled to a monthly salary of INR 25,000.00 INR as remuneration for services rendered to the Firm, subject to availability of profits and the limits prescribed under ITA 1961 s. 40(b). Remuneration shall not be paid to non-working Partners.
Banking: Current account with HDFC Bank, Bandra Branch — joint signatories for all cheques.
7.
ACCOUNTS AND AUDIT
The Partners shall maintain proper books of account of the Firm's business at the principal place of business. The accounting year of the Firm shall be 1 April to 31 March, aligned with the Indian financial year. Each Partner shall have the right to inspect and take copies of the Firm's accounts and books at all reasonable times (IPA 1932 s. 12(d)). Each Partner shall have full access to books at all reasonable times. While a statutory audit under ITA 1961 s. 44AB is not currently required, the Partners shall maintain proper books of account as required by IPA 1932 s. 9 and ensure that accounts are prepared annually. Bank accounts shall be operated as follows: Both Partners to sign jointly for transactions above INR 10,000..
8.
RETIREMENT, DEATH AND DISSOLUTION
Retirement: A Partner may retire from the Firm by giving not less than 90 days' prior written notice to all other Partners (IPA 1932 s. 32). Upon retirement, the retiring Partner's share and all outstanding amounts due shall be settled within ninety (90) days. Goodwill: Goodwill valued at 2 years' average net profit of the preceding 3 financial years. (IPA 1932 s. 55). Death or Insolvency: In the event of death or insolvency of a Partner, the remaining Partners may elect, by written notice within thirty (30) days, to continue the business by admitting the legal heir or assignee, or to dissolve the Firm (IPA 1932 s. 42). Dissolution: The Firm may be dissolved upon mutual written agreement of all Partners (IPA 1932 s. 40–44). Upon dissolution, the assets of the Firm shall be applied in the order prescribed by IPA 1932 s. 48. Dispute Resolution: Disputes arising out of or in connection with this Deed shall be subject to the exclusive jurisdiction of the courts at Maharashtra.
9.
GENERAL PROVISIONS
Governing Law: This Deed shall be governed by and construed in accordance with the laws of India, including IPA 1932 and ICA 1872. Stamp Duty: This Deed shall be stamped in accordance with the Indian Stamp Act, 1899 ("ISA 1899") and the applicable State Stamp Act, as required by law. Registration: The Firm may (but is not obligated to) be registered under IPA 1932 s. 58 at the Registrar of Firms. Note: an unregistered firm cannot sue third parties to enforce rights (IPA 1932 s. 69). Amendment: No amendment to this Deed is valid unless made in writing and signed by all Partners. Entire Agreement: This Deed constitutes the entire agreement between the Partners regarding the Firm's affairs and supersedes all prior oral or written understandings. Electronic Execution: This Deed may be executed electronically under IT Act 2000 s. 5.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.
PARTNER 1
Amit Ramesh Sharma
Date: ____________________
PARTNER 2
Sunita Vijay Patel
Date: ____________________
This deed shall be stamped in accordance with the Indian Stamp Act, 1899 and may be registered under the Indian Partnership Act, 1932.
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What Is a Partnership Agreement in India?
A Partnership Agreement (also called a Partnership Deed) is a written contract between two or more individuals who agree to carry on a business together with a view to profit. In India, partnerships are primarily governed by the Indian Partnership Act 1932, which defines a partnership as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. A well-drafted partnership deed is essential to define the rights, duties, and obligations of each partner and to prevent disputes.
Indian partnerships may be registered or unregistered. While registration with the Registrar of Firms under the Partnership Act 1932 is not mandatory, an unregistered firm cannot file a suit to enforce rights arising from the partnership contract, nor can partners enforce rights against each other, making registration strongly advisable. A registered firm also has greater credibility with banks, government authorities, and commercial counterparties. Partners must also obtain a PAN for the firm and comply with GST registration requirements under the CGST Act 2017.
The Indian Partnership Act 1932 sets out default rules for partnerships (such as equal profit-sharing and equal management rights), but partners are free to vary these through a written partnership deed. Key provisions in an Indian partnership deed include the firm name, the business nature, capital contributions, profit and loss sharing ratios, remuneration of working partners (subject to Income Tax Act 1961 limits), rules for admission and retirement of partners, and the procedure for dissolution. Indian courts, including High Courts and the Supreme Court of India, have consistently upheld the terms of registered partnership deeds over the default rules of the Partnership Act.
What's Covered in This Partnership Agreement Template
Our India-specific Partnership Agreement template covers all provisions required for a sound partnership deed under the Indian Partnership Act 1932.
Partners & Firm Details
Lists all partners with full names, addresses, and their agreed capital contributions. Includes the firm name and the nature of the partnership business.
Capital Contributions
Specifies each partner's initial capital contribution in ₹, provisions for additional capital calls, and interest on capital (if agreed upon).
Profit & Loss Sharing Ratios
Sets out the agreed ratio for sharing profits and losses, which may differ from the default equal-sharing rule under the Partnership Act 1932.
Partner Remuneration
Addresses salary, commission, or other remuneration for working partners, subject to the limits prescribed under the Income Tax Act 1961 for deductibility.
Management & Decision-Making
Defines voting rights, quorum requirements, and which decisions require unanimous consent versus majority approval of the partners.
Bank Accounts & Financial Management
Sets out how the firm's bank accounts are to be operated, authorised signatories, and financial year-end procedures.
Admission & Retirement of Partners
Specifies the procedure for admitting new partners and the conditions under which a partner may retire, including entitlement to goodwill and capital.
Expulsion of Partners
Sets out the circumstances and process for expelling a partner from the firm in accordance with the Partnership Act 1932.
Death or Insolvency of a Partner
Addresses whether the firm continues or dissolves upon the death, insolvency, or permanent incapacity of a partner.
Accounts & Audit
Requires the firm to maintain proper books of account and specifies audit requirements, including GST return filing obligations under the CGST Act 2017.
Dissolution of the Firm
Sets out the procedure for voluntary dissolution, including the settlement of accounts, payment of liabilities, and distribution of surplus to partners.
Dispute Resolution
Includes an arbitration clause under the Arbitration and Conciliation Act 1996 for resolving partner disputes without costly civil litigation.
How to Create a Partnership Agreement in India
Follow these steps to create and register a partnership deed that fully complies with Indian law.
- 1
Agree on Key Terms
Discuss and agree on capital contributions, profit-sharing ratios, remuneration, management roles, and exit provisions before drafting the deed.
- 2
Draft the Partnership Deed
Prepare the deed covering all essential provisions. Include the firm name, nature of business, registered office, and all partner details. Make sure the deed deviates from the Partnership Act 1932 defaults only where the partners have expressly agreed.
- 3
Execute on Stamp Paper
Execute the deed on appropriately stamped non-judicial stamp paper under the Indian Stamp Act 1899 or the relevant state Stamp Act. All partners must sign, and witnesses are advisable.
- 4
Register with the Registrar of Firms
File the deed with the Registrar of Firms in the state where the firm's principal place of business is located under the Partnership Act 1932. Registration is strongly recommended to enable the firm to enforce its rights in Indian courts.
- 5
Obtain PAN & GST Registration
Apply for a Permanent Account Number (PAN) for the firm and, if turnover exceeds the threshold, obtain GST registration under the CGST Act 2017. Open a current bank account in the firm's name.
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Legal Considerations for Partnerships in India
Understand these important Indian legal requirements before forming a partnership.
This template is for informational purposes only and does not constitute legal advice. Consult a qualified Indian advocate or legal practitioner for advice specific to your situation.
Reviewed for Indian law
Indian Partnership Act 1932
The Indian Partnership Act 1932 governs general partnerships in India. It sets out default rules on profit-sharing, management, and dissolution that apply unless varied by the partnership deed. An unregistered firm cannot file a suit to enforce its contractual rights under the Act, making registration with the Registrar of Firms strongly advisable. The maximum number of partners in a general partnership is 50 under the Companies Act 2013.
Partner Liability
Partners in an Indian general partnership have unlimited personal liability for the debts and obligations of the firm. This means creditors can pursue a partner's personal assets to satisfy firm debts. Businesses seeking limited liability should consider a Limited Liability Partnership (LLP) under the Limited Liability Partnership Act 2008 or a private limited company under the Companies Act 2013.
Taxation of Partnerships
An Indian partnership firm is taxed as a separate entity at the rate applicable to firms under the Income Tax Act 1961. Working partners may receive remuneration and interest on capital, which are deductible from the firm's income subject to the limits under the Act. Partners are not taxed separately on their share of profits if the firm is assessed as such. GST registration and compliance obligations apply to the firm if its turnover exceeds the threshold.
LLP as an Alternative
The Limited Liability Partnership Act 2008 provides an alternative structure that combines the flexibility of a partnership with limited liability for partners. An LLP is a separate legal entity, partners are not personally liable for the firm's debts beyond their capital contribution, and the LLP Agreement governs partner rights. Many Indian businesses are converting from general partnerships to LLPs to reduce personal liability risk.
Frequently Asked Questions
Form Your Indian Partnership Today
Use Doxuno's free Partnership Agreement template to create a comprehensive partnership deed for your Indian business. Customise the terms, execute on stamp paper, and register with confidence.
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