Partnership Dissolution Deed Format 2026 (Word) — Deed of Dissolution of Partnership Firm

A dissolution deed that closes the firm cleanly — settlement of accounts in the order the Partnership Act requires, who takes which asset and pays which liability, public notice, and the income-tax and GST closure steps.

Free · CORAA original — SA-aligned

Updated 1 Oct 2026

Type

Dissolution deed — by mutual consent

Law

Partnership Act, 1932 — Secs 39–55 (settlement: Sec 48); Sec 9B, 1961 Act / Sec 8, 2025 Act (tax year 2026-27)

After signing

Public notice, Registrar of Firms, income-tax notice, GST REG-16 and GSTR-10

Stamp duty

Varies by State — see the State Stamp Act

Share this template

Engagement details

The client and period this document is for.

Date of deed

Place of execution

Name of the firm

PAN of the firm(optional)

Principal place of business

Date of the partnership deed

Date of dissolution (close of business)

First partner — Name

First partner — Address

First partner — PAN

First partner — Profit share

Second partner — Name

Second partner — Address

Second partner — PAN

Second partner — Profit share

Partner responsible for winding up and custody of books

Live preview

14 required fields left to fill

Partnership Dissolution Deed Format 2026

DEED OF DISSOLUTION OF PARTNERSHIP

THIS DEED OF DISSOLUTION is made at {{execution_place}} on 1 October 2026 BETWEEN:

(1) {{partner1_name}}, residing at {{partner1_address}}, holding PAN {{partner1_pan}} (the "First Party"); AND

(2) {{partner2_name}}, residing at {{partner2_address}}, holding PAN {{partner2_pan}} (the "Second Party");

(each a "Party" and together the "Parties").

WHEREAS the Parties have been carrying on business in partnership under the name and style of "{{firm_name}}" (PAN: ) (the "Firm") at {{business_address}} under a Deed of Partnership dated {{original_deed_date}}, sharing profits and losses in the ratio of {{partner1_share}} : {{partner2_share}};

AND WHEREAS the Parties, being all the partners of the Firm, have mutually agreed to dissolve the Firm and to settle its accounts on the terms set out below;

NOW THIS DEED WITNESSETH AND IT IS HEREBY AGREED AS FOLLOWS:

1. Dissolution

The Firm stands dissolved by mutual consent of all the partners, in accordance with Section 40 of the Indian Partnership Act, 1932, with effect from the close of business on {{dissolution_date}} (the "Dissolution Date"). No new business shall be undertaken in the name of the Firm after the Dissolution Date.

2. Accounts

The books of the Firm have been made up to the Dissolution Date. A profit and loss account for the period ending on, and a balance sheet as at, the Dissolution Date have been prepared, examined and signed by both Parties as correct, and are annexed to this Deed. The assets and liabilities of the Firm as at that date are summarised in the Schedules.

3. Settlement of Accounts

The accounts of the Firm shall be settled in accordance with Section 48 of the Indian Partnership Act, 1932. Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, and lastly, if necessary, by the Parties individually in their profit-sharing ratio. The assets of the Firm, including any sums contributed by the Parties to make up deficiencies of capital, shall be applied in the following order:

first, in paying the debts of the Firm to third parties;
second, in paying to each Party rateably what is due to him or her from the Firm for advances as distinguished from capital;
third, in paying to each Party rateably what is due to him or her on account of capital; and
the residue, if any, shall be divided between the Parties in their profit-sharing ratio.

4. Realisation and Distribution of Assets

The assets of the Firm shall be dealt with as set out in Schedule A — either realised and the proceeds applied under Clause 3, or taken over by a Party at the value stated against the asset, that value being adjusted against the amount due to that Party. The book debts of the Firm shall be collected by {{winding_up_partner}} and accounted for under Clause 3; debts remaining uncollected after ______ months shall be ____________ [written off / assigned to a named Party at an agreed value].

5. Liabilities and Indemnity

The liabilities of the Firm shall be discharged as set out in Schedule B. Any liability of the Firm not appearing in the books as at the Dissolution Date, including any tax, interest or penalty for a period up to the Dissolution Date, shall be borne by the Parties in their profit-sharing ratio. A Party who has taken over a liability under Schedule B shall keep the other indemnified against it. Each Party shall indemnify the other against any liability incurred in the name of the Firm by that Party after the Dissolution Date otherwise than for the purposes of winding up.

6. Winding Up

{{winding_up_partner}} is authorised to do all things necessary to wind up the affairs of the Firm and to complete transactions begun but unfinished at the Dissolution Date — including collecting debts, paying creditors, operating the bank accounts for those purposes and then closing them, and signing returns, applications and statements before any authority. The authority of each Party to bind the Firm continues only so far as is necessary for these purposes, as provided in Section 47 of the Indian Partnership Act, 1932. The winding up shall be completed within ______ months, and a final account shall then be rendered to the other Party.

7. Public Notice

The Parties record that, under Section 45 of the Indian Partnership Act, 1932, they continue to be liable as partners to third parties for any act done by either of them which would have been an act of the Firm if done before the dissolution, until public notice of the dissolution is given. {{winding_up_partner}} shall, within ______ days, give public notice of the dissolution in the manner required by Section 72 of the said Act and, where the Firm is registered, give notice of the dissolution to the Registrar of Firms under Section 63.

8. Tax and Regulatory Closure

Income-tax: notice of discontinuance of the business shall be given to the Assessing Officer within the time allowed by law, and the return of income of the Firm for the period up to the Dissolution Date shall be filed and the tax paid. The Parties acknowledge that the Firm will be assessed as if no dissolution had taken place and that they remain jointly and severally liable for its tax.
Tax deducted and collected at source: all statements for the period up to the Dissolution Date shall be filed and certificates issued; the TAN shall thereafter be surrendered.
GST: an application for cancellation of registration shall be filed in FORM GST REG-16 within the prescribed time, the liability on stock and capital goods held on the date of cancellation shall be paid, and the final return in FORM GSTR-10 shall be filed.
Other registrations — shops and establishments, professional tax, provident fund, ESI, import-export code, trade licences: ____________ [list those held and who will surrender each].

9. Income-tax on Distribution of Assets

The Parties acknowledge that where a capital asset or stock-in-trade of the Firm is received by a Party in connection with the dissolution, the Firm is deemed to have transferred it at its fair market value under Section 9B of the Income-tax Act, 1961 or Section 8 of the Income-tax Act, 2025, as applicable. The values in Schedule A have been fixed with that in mind, and the resulting tax shall be treated as a liability of the Firm under Clause 5.

10. Firm Name and Goodwill

____________ [choose one — "Neither Party shall use the name of the Firm after the winding up is complete." / "{{partner1_name}} shall be entitled to continue a business under the name of the Firm as sole proprietor, and the goodwill is valued at ₹______ and adjusted in Schedule A." Where a Party continues the business alone, it is a new proprietary concern with its own PAN-based registrations.]

11. Books and Records

The books of account, vouchers, tax records and statutory registers of the Firm shall be kept by {{winding_up_partner}} for a period of not less than ______ years from the Dissolution Date, and the other Party shall have access to them and may take copies at all reasonable times.

12. Full and Final Settlement

On completion of the settlement under this Deed, neither Party shall have any claim against the other in respect of the Firm, its business, assets or goodwill, except for breach of this Deed and except for liabilities to be shared under Clause 5.

13. Disputes

Any dispute arising out of this Deed or the winding up shall be referred to arbitration under the Arbitration and Conciliation Act, 1996, the seat of arbitration being {{execution_place}}.

14. Stamp Duty and Registration

This Deed is executed on non-judicial stamp paper of the value required for an instrument of dissolution of partnership under the Stamp Act applicable in the State of execution; the duty varies from State to State and is commonly higher where immovable property is taken by a partner who did not bring it in. Where immovable property is being allotted to a Party, advice on registration shall be taken before execution.

SCHEDULE A — Assets as at the Dissolution Date

Asset	Book value (₹)	Agreed / fair market value (₹)	Realised, or taken over by
____________	____________	____________	____________
____________	____________	____________	____________
____________	____________	____________	____________
____________	____________	____________	____________

SCHEDULE B — Liabilities as at the Dissolution Date

Liability / creditor	Amount (₹)	To be paid out of / by	Due date
____________	____________	____________	____________
____________	____________	____________	____________
____________	____________	____________	____________

SCHEDULE C — Partners' Accounts

Partner	Capital balance (₹)	Advances / loans (₹)	Share of residue or (deficiency) (₹)	Net payable / (receivable) (₹)
{{partner1_name}}	____________	____________	____________	____________
{{partner2_name}}	____________	____________	____________	____________

IN WITNESS WHEREOF the Parties have set their respective hands to this Deed on the day, month and year first above written.

_______________________________

{{partner1_name}} (First Party)

_______________________________

{{partner2_name}} (Second Party)

Witnesses

1. Signature: _______________________________

Name: _______________________________

Address: _______________________________

2. Signature: _______________________________

Name: _______________________________

Address: _______________________________

Free · Standard resource form required · Firm data stays in your browser

What’s inside

An excerpt from the template.

DEED OF DISSOLUTION OF PARTNERSHIP

THIS DEED OF DISSOLUTION is made at ___ on ___ BETWEEN:

WHEREAS the Parties have been carrying on business in partnership under the name and style of "___" (PAN: ___) (the "Firm") at ___ under a Deed of Partnership dated ___, sharing profits and losses in the ratio of ___ : ___;

AND WHEREAS the Parties, being all the partners of the Firm, have mutually agreed to dissolve the Firm and to settle its accounts on the terms set out below;

↑ Excerpt only — the full template is what you download as Word

About this template

What you’re downloading, and when to use it.

This template follows the format published by the Institute of Chartered Accountants of India (ICAI) in the AASB Audit Working Paper Templates (June 2023), the authoritative reference for Indian statutory-audit documentation. Fill in your firm’s letterhead and the engagement details on the form above, click Download Word file, and you’ll get a fully formatted .docx ready to use.

Everything is generated in your browser and on a stateless API endpoint — no account, nothing stored on our servers. We’ll ask for a work email once before your first download so we can send you the file and the occasional relevant update; after that, downloads on this device are instant. Edit freely in Word, Google Docs or Pages before sending to your client.

Common questions

FAQs.

In what order are the firm's assets applied on dissolution?

Section 48 of the Indian Partnership Act, 1932 sets the order, subject to any agreement between the partners. Losses, including deficiencies of capital, are met first out of profits, then out of capital, and finally by the partners personally in their profit-sharing ratio. The assets are then applied in paying outside creditors first, then partners' advances (loans as distinct from capital), then partners' capital, and whatever is left is divided in the profit-sharing ratio. A partner's loan to the firm therefore ranks ahead of capital but behind every outside creditor.

Is tax payable in FY 2026-27 when partners take over the firm's assets on dissolution?

Yes, in the firm's hands. Section 9B of the Income-tax Act, 1961 — Section 8 of the Income-tax Act, 2025 from tax year 2026-27 — treats a capital asset or stock-in-trade received by a partner in connection with the dissolution as transferred by the firm at fair market value on the date of receipt. The resulting business income or capital gain is taxed in the firm's final assessment. Section 45(4) is a different provision and applies on reconstitution, not on dissolution. In practice this means the takeover values in the deed should be supportable fair values, and the tax should be provided for before the residue is divided.

What notices have to be given after a firm is dissolved?

Three sets. First, public notice of dissolution under Section 45 read with Section 72 of the Partnership Act — Official Gazette, a vernacular newspaper circulating in the district, and for a registered firm, notice to the Registrar of Firms under Section 63; until this is done the partners remain liable to third parties for each other's acts. Second, income-tax: under Section 176(3) of the 1961 Act a person discontinuing a business must notify the Assessing Officer within 15 days. Third, GST: an application for cancellation in FORM GST REG-16 within 30 days of the closure, followed by the final return in FORM GSTR-10 within three months of the date of cancellation or the cancellation order, whichever is later.

Are partners still liable for the firm's tax after dissolution?

Yes. Under Section 189 of the Income-tax Act, 1961, where a firm is dissolved or its business discontinued, the Assessing Officer assesses the firm as if no dissolution had taken place, and every person who was a partner at the time of dissolution is jointly and severally liable for the tax, penalty and other sums payable. A dissolution deed can decide how the partners share such a demand between themselves, but it cannot limit what the department can recover from any one of them. The same is true of GST dues for the period before cancellation.

What is the difference between dissolution of the firm and retirement of a partner?

Section 39 of the Indian Partnership Act, 1932 defines dissolution of a firm as the dissolution of partnership between all the partners. If one partner leaves and at least two others continue the business, the firm survives and the document needed is a retirement deed. If the partnership between all of them ends — including where one of only two partners leaves — the firm is dissolved, its accounts are settled under Section 48, and its PAN, TAN and GST registration are closed even if one former partner carries on the same business alone.

Related templates

You might also need.

Partnership Deed Format — Section 40(b) Compliant Template

Free partnership deed format with Section 40(b)-compliant remuneration and 12% interest clauses. Capital, prof

Partner Retirement Deed Format 2026 (Word) — Retirement of Partner with Settlement of Accounts

Free deed of retirement of partner format, updated for 2026. Settlement of accounts, release, indemnity, publi

Partner Admission Deed Format 2026 (Word) — Admission of New Partner / Reconstitution Deed

Free deed of admission of new partner format, updated for 2026. Capital, goodwill, new profit-sharing ratio, l

Supplementary Partnership Deed Format 2026

Free supplementary partnership deed format for 2026 — change partners' remuneration and interest on capital. S