WHAT IS PARTNERSHIP? ACCORDING TO THE INDIAN PARTNERSHIP ACT, 1932 “Partnership is the relation between persons who have agreed to share profits of a business carried on by all or any of them acting for all.” Persons who have entered into partnership with one another are called individually "partner" and collectively "a firm". When duration of partnership is not defined, the partnership is "partnership at will". When persons become partner for a particular venture or for a specified time, it is called a "particular partnership". WHAT IS THE RELATIONSHIP BETWEEN THE PARTNERS? Relationship between the partners is defined through the partnership deed. Partnership Deed is necessary under section 58(1) at the time of registration of any firm. Though, there is no requirement of having any instrument in writing at the time of admission and / or retirement or dissolution of firm, under Rule 16 of Indian Partnership Rules, 1989, the Registrar of Firms (who is a registering authority to register the firm) is empowered to take on record the evidence in support of registering any partnership. Therefore, the Deed is necessary to be executed to place on record the relationship of partners at the time of registration and at subsequent changes to register such changes. Various forms as are required to be filled up and filed with the Registrar need certain information which are: (i) Name of the firm (ii) Date of commencement of Business of the firm (iii) Address including address of the additional place/s of Business of the firm (iv) Nature of Business (v) Duration (vi) Sharing of Profit & Loss between Partners (vii) Capital of the firm Any additional clauses can be incorporated by the partners as required by them. Hence, relationship between partners right from formation to dissolution is mentioned in the Deed of Partnership. RELATIONSHIP OF THE PARTNERS TO THE THIRD PARTY A partner is the agent of the firm for the purposes of the business of the firm. The partners in a firm may, by contract between the partners, extend or restrict the implied authority of any partner. Every partner is liable jointly with other partners and also severally for all acts of the firm done while he is a partner. PARTNERSHIP TAXATION Partnership firm is treated as a separate entity. It is immaterial that partnership is registered or not registered. So partnership firm is taxes under the income tax slab for partnership firm and partners are taxes under the income tax slab for individuals. Partnership Firm are taxed at a flat rate irrespective of income for the A.Y.2013-14 or F.Y.2012-13 as follows • Tax rates on partnership firm is 30% • Any long term capital gains shall be taxable @ 20% • Short term capital gains shall be taxable @ 15% • Education cess @2% and secondary & higher education cess @1% will be applicable. However surcharges has eliminated from A.Y.2012-11.
Posted on: Sat, 24 Aug 2013 05:52:10 +0000
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