Indian Partnership Act
How to Register a Partnership Firm: Procedure, PAN and GST
Setting up a firm has three parallel tracks. The firm itself: a deed, stamping and registration with the Registrar of Firms under Chapter VII. The firm's tax identity: a PAN, a bank account and, where needed, a TAN. And the firm's indirect tax identity: GST registration once the threshold is crossed or a compulsory category applies. Registration under the Partnership Act is optional in form, but Section 69 makes it practically indispensable. This note sets out each step.
The three lanes of setting up a firm: registration with the Registrar, PAN and bank, and GST
1. The Deed Comes First
§ Drafting and stamping • A written deed is not required by the Act to create a partnership, but is required for registration, for tax purposes, and for peace of mind. • Stamp duty is a State subject; the deed is executed on stamp paper of the value the State prescribes, and is usually notarised. • Contents. Name and address of the firm and partners, nature and place of business, date of commencement, duration, capital, profit and loss sharing ratios, interest and remuneration, powers and duties, banking arrangements, admission, retirement and death, accounts and audit, and an arbitration clause. • Execution. Signed by all partners, each keeping a copy. |
2. Registration under Chapter VII
Step | Provision | What it involves |
|---|---|---|
Application | s. 58(1) | A statement in the prescribed form, with the prescribed fee, sent to the Registrar of the area in which the place of business is situated |
Contents of the statement | s. 58(1) | The firm name; the place or principal place of business; the names of any other places where business is carried on; the date on which each partner joined; the names in full and permanent addresses of the partners; and the duration of the firm |
Signature and verification | s. 58(1), (2) | Signed by all the partners, or by their agents specially authorised, and verified in the prescribed manner |
Name restriction | s. 58(3) | The firm name must not contain words expressing or implying the sanction, approval or patronage of Government, except with the State Government's written consent |
Recording | s. 59 | When satisfied that Section 58 has been complied with, the Registrar records an entry of the statement in the Register of Firms and files the statement; registration is then complete |
§ Keeping the register current s. 60: alteration in the firm name or in the principal place of business, which requires a fresh statement signed and verified by all the partners. s. 61: opening or closing of branches. s. 62: change in the name or permanent address of a partner. s. 63: changes in the constitution of the firm and its dissolution, and the election of a minor on attaining majority. Why it matters. Section 69 requires that the person suing be shown in the Register as a partner; an unrecorded change can defeat a later suit. |
- Other provisions. Section 64 allows rectification of mistakes, Section 65 amendment on a court's order, Sections 66 and 67 inspection and copies, Section 68 the evidentiary value of entries, and Section 70 punishment for furnishing false particulars.
3. Timing and Effect
i. Optional and any time. A firm may be registered at formation or later; there is no time limit, and no penalty for not registering.
ii. No retrospective cure for a suit. A suit filed while the firm was unregistered is not saved by registering afterwards; register before litigating.
iii. State variations. Forms, fees and some procedures differ between States, and a few States have amended Chapter VII; check the local rules.
4. PAN, TAN and the Bank Account
Item | What is needed |
|---|---|
PAN for the firm | Applied for in the firm's name in the status of a firm, signed by a partner, with the deed, proof of the firm's address and the identity of the signing partner |
TAN | Required where the firm must deduct tax at source, including on payments to partners beyond the threshold introduced in 2024 |
Bank account | A current account in the firm name, opened with the deed, the firm's PAN, the registration certificate where available, an authorisation in favour of the operating partner, and KYC of the partners |
Books and records | Separate books for the firm; firm money should never be kept in a partner's personal account |
5. GST Registration
§ When, how and after • When. On crossing the turnover threshold, which differs for goods and services and for special category States; and immediately, whatever the turnover, in compulsory cases such as inter-State supply, supply through an electronic commerce operator, and liability under reverse charge. • How. An application on the GST portal in the firm's name and PAN, with the partnership deed, photographs and identity and address proof of the partners, proof of the place of business, bank details, and an authorisation for the signatory. A separate registration is taken for each State from which supplies are made. • After. Issue tax invoices, file periodic returns and pay tax; consider the composition scheme if eligible. • Liability of partners. The firm and its partners may be held jointly and severally liable for the firm's dues, and a retiring partner should intimate the department promptly, failing which liability continues. |
6. The Order That Works
i. Draft and stamp the deed.
ii. Apply for the firm's PAN, and a TAN if needed.
iii. Open the bank account.
iv. Apply to the Registrar of Firms with the statement and fee.
v. Take GST registration and any trade licences, shops and establishment registration, professional tax or Udyam registration that the business requires.
7. Frequently Asked Questions
Is registration of a partnership firm compulsory?
No. It is optional, but an unregistered firm suffers the disabilities in Section 69, including a bar on suing to enforce contractual rights.
Where is the application for registration filed?
With the Registrar of Firms of the area in which the place or principal place of business of the firm is situated, under Section 58.
Can a firm be registered after it starts business?
Yes, at any time; but a suit filed before registration is not saved by registering later.
Does a firm need GST registration from day one?
Only if a compulsory category applies, such as inter-State supply; otherwise on crossing the turnover threshold.