Supplementary Partnership Deed Format 2026
SUPPLEMENTARY DEED OF PARTNERSHIP
(Modification of terms relating to remuneration to working partners and interest on capital)
THIS SUPPLEMENTARY DEED OF PARTNERSHIP is made at {{execution_place}} on 1 October 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").
WHEREAS the Partners are carrying on business in partnership under the name and style of "{{firm_name}}" (PAN: ) (the "Firm") at {{business_address}}, on the terms of a Deed of Partnership dated {{original_deed_date}} (the "Principal Deed");
AND WHEREAS the Principal Deed provides that its terms may be altered by an instrument in writing signed by all the Partners;
AND WHEREAS the Partners have mutually agreed to revise the terms relating to remuneration payable to the working partners and interest payable on the Partners' capital, and are desirous of recording the revised terms in writing;
NOW THIS DEED WITNESSETH AND IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS:
1. Effective Date
The terms recorded in this Supplementary Deed shall take effect from {{effective_date}} (the "Effective Date") and shall apply to remuneration and interest for the period on and from the Effective Date. For the period up to the Effective Date, remuneration and interest shall continue to be governed by the Principal Deed.
2. Working Partners
The Partners confirm that {{partner1_name}} and {{partner2_name}} are working partners, each being an individual actively engaged in conducting the affairs of the business of the Firm. ____________ [if any partner is not a working partner, name that partner here and exclude him or her from Clause 3 — remuneration to a non-working partner is not deductible at all]
3. Remuneration to Working Partners
In consideration of their active engagement in the business, the working partners shall be entitled to remuneration for each accounting year (or part thereof) from the Effective Date. The aggregate remuneration payable to all the working partners for an accounting year shall be the maximum amount allowable as a deduction to the Firm under Section 40(b)(v) of the Income-tax Act, 1961 or Section 35(e) of the Income-tax Act, 2025, as applicable to that year, computed on the book profit of the Firm as under:
- On the first ₹6,00,000 of the book profit, or in case of a loss — ₹3,00,000 or 90% of the book profit, whichever is more;
- On the balance of the book profit — 60% of such balance.
"Book profit" shall have the meaning assigned to it in the said provisions. If the said limits are amended, the limits in force for the relevant year shall apply without the need for a further deed.
The aggregate remuneration so computed shall be divided between the working partners as follows: {{partner1_name}} — {{partner1_rem_share}}; {{partner2_name}} — {{partner2_rem_share}}. The working partners may draw against their remuneration monthly, on account, in such sums as the Partners may agree; the remuneration shall be finally computed and credited to the respective Partners' accounts on the closing of the books for the accounting year, and any excess drawn shall be treated as drawings.
[Alternative to Clause 3, where the Partners prefer fixed amounts — delete whichever is not used: "{{partner1_name}} shall be entitled to remuneration of ₹____________ per month and {{partner2_name}} to remuneration of ₹____________ per month, PROVIDED that if the aggregate so payable for any accounting year exceeds the maximum amount allowable under Section 40(b)(v) of the Income-tax Act, 1961 / Section 35(e) of the Income-tax Act, 2025, the remuneration of each working partner shall stand reduced proportionately so that the aggregate equals that maximum."]
4. Interest on Capital
With effect from the Effective Date, simple interest at the rate of 12% per annum shall be payable to each Partner on the amount standing to the credit of that Partner's capital account ____________ [state whether on opening balance, or on daily / monthly product; state whether current-account and loan balances also carry interest], PROVIDED that the rate shall not in any year exceed the maximum rate allowable as a deduction under Section 40(b)(iv) of the Income-tax Act, 1961 or Section 35(e) of the Income-tax Act, 2025, as applicable (presently 12% simple interest per annum). Such interest shall be credited to the Partners' accounts before ascertaining the divisible profit. No interest shall be charged on drawings unless the Partners otherwise agree in writing.
5. Loss or Inadequacy of Profit
Interest on capital and remuneration under this Deed are a charge against the profits of the Firm and shall be payable even where their provision results in, or increases, a loss, subject always to the ceilings in Clauses 3 and 4. The Partners may, by a resolution in writing signed by all of them before the end of an accounting year, waive or reduce the interest or remuneration for that year.
6. Tax Deduction at Source
The Firm shall deduct tax at source on remuneration and interest credited or paid to each Partner, at the time of credit (including credit to the capital account) or payment, whichever is earlier, in accordance with Section 194T of the Income-tax Act, 1961 or Section 393(3) of the Income-tax Act, 2025, as applicable, and shall deposit the tax, file the statements and issue the certificates required by law. Share of profit is not subject to such deduction.
7. Substitution in the Principal Deed
Clause ______ (Remuneration) and Clause ______ (Interest on Capital) of the Principal Deed shall, with effect from the Effective Date, stand substituted by Clauses 2 to 6 of this Supplementary Deed. ____________ [quote the clause numbers of the Principal Deed being replaced]
8. Principal Deed Otherwise Unchanged
Save as modified by this Supplementary Deed, all the terms and conditions of the Principal Deed — including the capital, the profit and loss sharing ratio, and the constitution of the Firm — shall remain unaltered and in full force. This Supplementary Deed shall be read with, and form part of, the Principal Deed.
9. Stamp Duty
This Supplementary Deed is executed on non-judicial stamp paper of the value required for a supplementary or amending instrument of partnership under the Stamp Act applicable in the State of execution; the duty varies from State to State.
IN WITNESS WHEREOF the Partners have set their respective hands to this Supplementary 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: _______________________________
Drafting notes (delete before execution)
- Execute the deed on or before the Effective Date. Remuneration or interest for any period before the date of the deed that authorises it is disallowed — a supplementary deed signed in March cannot rescue remuneration for April to February.
- The deed must either state each working partner's remuneration or lay down how it is to be quantified (CBDT Circular No. 739 dated 25-3-1996). "As may be mutually agreed" on its own is the wording that loses the deduction.
- For a firm with three or more partners, add further partner blocks and extend the split in Clause 3 so that the shares total 100%.
- If the profit-sharing ratio or the partners themselves are changing, this is the wrong document — use a deed of admission, retirement or reconstitution instead.
