Partnership Deed Format — Section 40(b) Compliant Template
DEED OF PARTNERSHIP
THIS DEED OF PARTNERSHIP is made at {{execution_place}} on 31 July 2026 BETWEEN:
(1) {{partner1_name}}, residing at {{partner1_address}}, holding PAN {{partner1_pan}} (hereinafter referred to as the "First Partner"); AND
(2) {{partner2_name}}, residing at {{partner2_address}}, holding PAN {{partner2_pan}} (hereinafter referred to as the "Second Partner");
(each a "Partner" and collectively the "Partners", which expressions shall, unless repugnant to the context, include their respective legal heirs, executors and administrators).
WHEREAS the Partners have mutually agreed to carry on business in partnership on the terms and conditions hereinafter appearing, and are desirous of reducing the same to writing;
NOW THIS DEED WITNESSETH AND IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS:
1. Name, Business and Place of Business
The partnership shall be carried on under the name and style of "{{firm_name}}" (the "Firm"). The business of the Firm shall be {{business_nature}}, and such other business as the Partners may mutually agree upon from time to time. The principal place of business shall be at {{business_address}}, with liberty to open branches at such other place(s) as the Partners may decide.
2. Commencement and Duration
The partnership shall be deemed to have commenced on {{commencement_date}} and shall be a partnership at will, subject to the provisions of the Indian Partnership Act, 1932 and the terms of this Deed.
3. Capital
The initial capital of the Firm shall be contributed by the Partners as set out in the Schedule hereto. Further capital, if any, required by the Firm shall be brought in by the Partners in such proportion as may be mutually agreed. The capital account of each Partner shall be maintained separately in the books of the Firm.
4. Profit and Loss Sharing
The net profits and losses of the Firm, after providing for interest on capital and remuneration to working partners as per Clauses 5 and 6, shall be shared by the Partners in the proportions set out in the Schedule hereto.
5. Interest on Capital
Simple interest at the rate of 12% per annum, or such lower rate as may be prescribed under Section 40(b)(iv) of the Income-tax Act, 1961 from time to time, shall be paid to each Partner on the amount standing to the credit of that Partner's capital account. Such interest shall be credited before ascertaining the divisible profits. The Partners may, by mutual consent, waive or reduce the interest for any accounting year.
6. Remuneration to Working Partners
Both Partners shall be working partners actively engaged in conducting the affairs of the business of the Firm. In consideration thereof, each working partner shall be entitled to remuneration, which the Partners hereby authorise in accordance with, and subject to the ceiling under, Section 40(b)(v) of the Income-tax Act, 1961. The aggregate remuneration payable to all working partners for each accounting year shall not exceed the maximum amount deductible under that section, computed on the book profit of the Firm as under:
- On the first ₹6,00,000 of book profit, or in case of a loss — ₹3,00,000 or 90% of book profit, whichever is more;
- On the balance of book profit — 60% of such balance.
"Book profit" shall have the meaning assigned to it in Explanation 3 to Section 40(b) of the Income-tax Act, 1961. The aggregate remuneration so computed shall be divided between the working partners in the ratio of {{partner1_share}} : {{partner2_share}}, or in such other ratio as the Partners may mutually agree in writing before the end of the relevant accounting year. Remuneration shall be credited to each working partner's account at the close of the accounting year. The Firm shall deduct tax at source on remuneration and interest paid or credited to Partners in accordance with Section 194T of the Income-tax Act, 1961, wherever applicable.
7. Banking
The bank account(s) of the Firm shall be opened and maintained in the name of the Firm with such bank(s) as the Partners may decide, and shall be operated by either Partner singly or by both jointly, as mutually agreed and communicated to the bank.
8. Books of Account and Audit
Proper books of account shall be maintained at the principal place of business and shall at all times be open to inspection by every Partner. The accounts shall be closed on 31st March each year, and a Balance Sheet and Profit & Loss Account shall be prepared and signed by all Partners. The accounts shall be audited wherever required under the Income-tax Act, 1961 (including tax audit under Section 44AB) or any other applicable law.
9. Admission, Retirement and Death
No new partner shall be admitted except with the consent of all the Partners. A Partner may retire by giving not less than three months' notice in writing to the other Partner(s). On the death or retirement of a Partner, the Firm shall not stand dissolved; the surviving or continuing Partner(s) may continue the business, and the amount standing to the credit of the outgoing or deceased Partner (capital, accumulated profits and interest, less drawings) shall be paid to the outgoing Partner or the legal heirs of the deceased Partner, in such manner and over such period as may be mutually agreed.
10. Arbitration
All disputes and differences between the Partners, or between a Partner and the legal representatives of a deceased Partner, touching this Deed or the business of the Firm, shall be referred to arbitration in accordance with the Arbitration and Conciliation Act, 1996. The seat of arbitration shall be {{execution_place}}.
11. Dissolution
The Firm may be dissolved by mutual consent of all the Partners, or otherwise in accordance with the Indian Partnership Act, 1932. On dissolution, the assets of the Firm shall be realised, the liabilities discharged, and the surplus, if any, divided between the Partners in their profit-sharing ratio after returning their respective capital contributions.
12. General
In all matters not expressly provided for in this Deed, the Partners shall be governed by the provisions of the Indian Partnership Act, 1932. This Deed may be altered or added to only by an instrument in writing signed by all the Partners. This Deed is executed on non-judicial stamp paper of appropriate value as required under the Stamp Act applicable in the State of execution.
SCHEDULE — Capital and Profit-Sharing Ratio
| Partner | PAN | Capital contribution (₹) | Profit share |
|---|
| {{partner1_name}} | {{partner1_pan}} | {{partner1_capital}} | {{partner1_share}} |
| {{partner2_name}} | {{partner2_pan}} | {{partner2_capital}} | {{partner2_share}} |
IN WITNESS WHEREOF the Partners have set their respective hands to this Deed on the day, month and year first above written.
_______________________________
{{partner1_name}} (First Partner)
_______________________________
{{partner2_name}} (Second Partner)
Witnesses
1. Signature: _______________________________
Name: _______________________________
Address: _______________________________
2. Signature: _______________________________
Name: _______________________________
Address: _______________________________
