Flat 30% at Firm Level
The firm is taxed at a flat 30% on its total income. Partner's share of profit is exempt in the partner's hands under Section 10(2A).
PARTNERSHIP FIRM COMPLIANCE
Partnership Firm Compliance Registration
Lightest compliance load of any Indian business form. No annual return to any registrar, no MCA fee. Books under Section 44AA, ITR-5, Section 40(b) remuneration, Section 194T partner TDS and Section 44AB audit when triggered . Flat 30% firm tax rate.
DedicatedExpert Assistance
₹0Registrar Annual Fee
ITR-531 Jul / 31 Oct
NO REGISTRAR FILING
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SAMPLE
Partnership Registration Certificate
Registrar of Firms (ROF) — sample registration certificate
Illustrative sample. Your official certificate is issued after approval.
01
No Annual ROC Return
Unlike LLP or company — no Form 11/8, no AOC-4/MGT-7, no registrar annual fee
02
ITR-5 by 31 Jul / 31 Oct
Non-audit: 31 July. Audit cases: 31 October. Late filing risks loss of loss carry-forward
03
Section 194T from 1 Apr 2025
10% TDS on partner remuneration/interest once payments to a partner exceed ₹20,000 in the year
04
Flat 30% Tax
Firm taxed at flat 30%. Partner share exempt under Section 10(2A) in partner's hands
OVERVIEW
What is Partnership Firm Annual Compliance?
Annual compliance for a partnership firm under the Indian Partnership Act, 1932 is entirely tax-side. There is no annual return to any registrar, no ROC form and no MCA fee. The Registrar of Firms is notified only when the constitution of the firm changes.
The firm must maintain books under Section 44AA, get a Section 44AB tax audit if turnover or professional receipts cross the prescribed thresholds, file ITR-5 by 31 July (non-audit) or 31 October (audit), deduct Section 194T TDS at 10% on partner payments above ₹20,000, and file GST/TDS returns if registered. Partner remuneration and interest are deductible only within Section 40(b) limits and as authorised by the partnership deed.
Governing Law
Indian Partnership Act, 1932
Registrar Annual Filing
None
Return Form
ITR-5
Tax Rate
Flat 30%
COMPLIANCE CALENDAR
Tax-Side Deadlines (Self-Tracked)
| Obligation | Due Date | Form / Action |
|---|---|---|
| Advance tax (1st instalment) | 15 June | Challan 280 |
| TDS return Q4 (prev. year) | 31 May | 24Q / 26Q |
| ITR-5 (non-audit) | 31 July | ITR-5 |
| TDS return Q1 | 31 July | 24Q / 26Q |
| Advance tax (2nd) | 15 September | Challan 280 |
| Tax audit report (if applicable) | 30 September | 3CA/3CB + 3CD |
| ITR-5 (audit cases) | 31 October | ITR-5 |
| TDS return Q2 | 31 October | 24Q / 26Q |
| GSTR-9 (if applicable) | 31 December | GSTR-9 |
| Monthly TDS deposit (incl. 194T) | 7th of next month | Challan 281 |
TAXATION
How a Partnership Firm Is Taxed
Section 40(b) Remuneration
Partner salary, interest and commission are deductible only if authorised by the deed and within the limits of Section 40(b). Deed must match the books.
Books under Section 44AA
Maintain books of account as prescribed. Depreciation, fixed assets and partner capital accounts must support the computation.
Partner ITR-3
Partners typically file ITR-3 for their own income (including remuneration/interest from the firm). Share of profit is exempt under 10(2A).
SECTION 194T
TDS on Payments to Partners (from 1 April 2025)
What Attracts TDS
Salary, remuneration, commission, bonus or interest paid to a partner. Aggregate payments to that partner above ₹20,000 in the financial year trigger 10% TDS.
When to Deduct
At the time of credit or payment, whichever is earlier. Deposit by the 7th of the following month (Challan 281).
Reporting
Report in quarterly Form 26Q. Issue Form 16A to partners. Most firms miss this in the first year — treat drawings correctly.
Why It Matters
Non-deduction attracts interest and possible disallowance. Align partner payments with the deed and the TDS calendar.
TAX AUDIT
When Section 44AB Applies
Business Turnover
Tax audit if turnover exceeds ₹1 crore (or ₹10 crore if cash receipts/payments are within the 5% limit under current rules).
Professional Receipts
Audit if professional receipts exceed ₹50 lakh in the year.
Report Due
Form 3CA/3CB with 3CD typically by 30 September. ITR-5 then due by 31 October.
Penalty for Non-Audit
0.5% of turnover/receipts, up to ₹1,50,000, for failure to get accounts audited when required.
PENALTIES
Cost of Missing Tax Deadlines
| Default | Consequence (Indicative) |
|---|---|
| Late ITR-5 | Late fee under Section 234F (e.g. ₹5,000); possible loss of loss carry-forward under Section 80 |
| Late TDS return | ₹200 per day under Section 234E (subject to caps) |
| Late TDS deposit | Interest at 1.5% per month |
| No tax audit when required | 0.5% of turnover, max ₹1,50,000 |
| Advance tax shortfall | Interest under Sections 234B / 234C |
WHY CHOOSE US
Why Corporate Mart for Firm Compliance?
No Registrar Filing
We focus only on what a firm actually owes — books, ITR-5, 40(b) and 194T — with zero ROC annual return.
Deed vs Accounts
Remuneration and interest checked against the partnership deed so deductions stand under Section 40(b).
Section 194T Handled
Partner TDS at 10%, deposit and Form 26Q so the new obligation from 1 April 2025 is not missed.
ITR-5 on Time
Filing by 31 July or 31 October to protect loss carry-forward and avoid late fees.
Books → Deed Check → 40(b) · 194T → ITR-5 → Partner Coordination
FAQ
Frequently Asked Questions
No. A partnership firm has no annual return to the Registrar of Firms or MCA. The registrar is notified only when the constitution of the firm changes.
31 July if tax audit is not applicable; 31 October if Section 44AB audit applies. Late filing can attract a fee and risk loss of loss carry-forward.
From 1 April 2025, the firm must deduct TDS at 10% on salary, remuneration, commission, bonus or interest paid to a partner once aggregate payments to that partner exceed ₹20,000 in the financial year. Report in Form 26Q.
Under Section 44AB when business turnover exceeds ₹1 crore (or ₹10 crore with the cash threshold met) or professional receipts exceed ₹50 lakh. Report typically by 30 September; ITR-5 by 31 October.
Deductible in the firm's hands only if authorised by the deed and within Section 40(b) limits. Taxable in the partner's hands. Share of residual profit is exempt under Section 10(2A).
A flat 30% on the firm's total income (plus applicable surcharge and cess). Confirm current rates for the assessment year.
Only if the firm is required to register under GST (turnover threshold or other criteria). Then GSTR-1, GSTR-3B and, where applicable, GSTR-9 apply.
A firm has no Form 11 or Form 8 and no MCA annual fee. An LLP must file Form 11 (by 30 May) and Form 8 (by 30 October) and DIR-3 KYC for designated partners. Both file ITR-5.
