Overview

The unregistered partnership is valid in India but there are some vital implications to consider. In India, there are various ways to form a partnership firm registration, it can be done with the help of oral or written agreement.  Partners must be aware of some important limitations of unregistered partnership deed.

As per the Indian Partnership Act 1932, the partnership can be formed with oral and written agreements. In case the deep is in written but not registered with the Registrar of Firms, then it is considered as an unregistered partnership. However, it is still a valid partnership deep but has some limitations.

• It is not valid as evidence to resolve disputes between partners or third party in a court of law.
• Partners are not allowed to impose rights and obligations under the partnership deed against third parties.
• Partners can not claim any tax benefits and deductions under the income tax act1961 until the partnership is registered.
• Partners cannot file case against each other or the firm in case of any dispute.

Why

Registering your partnership plays vital role as it adds significant advantages to your business, here we will know why you should have a registered partnership instead unregistered partnership: -

1. Legal Recognition: - In order to get legal recognition, the partnership firm must be registered with the registrar of firms, it gives a separate legal identity to firm from its partners.

2. Protection of Legal Rights: - Registered partnership protects the legal right and obligations of partners, as it clearly expresses the rights and roles of partners.

3. Avoidance of Disputes: - Registering a partnership means clear understanding the terms and conditions of the partnership, it reduces misconceptions and disputes among partners. Partnership deep can be used as an evidence in case of any dispute.

4. Tax Benefits: - One of the major advantages of registering a partnership is that, the partnership becomes eligible for tax benefits and deductions under Income Tax Act 1961.

5. Easy Transfer of Ownership: - Registered partnerships have an easy process to transfer, whether it is transfer of ownership, or adding or removing partners in the firm.

Process

1. Select the Unique Name of Partnership Firm: - Choose the unique name of your firm that is not already linked or registered with the registrar of firms.

2. Preparing the Partnership Deed: - Partners must prepare a partnership deed that includes names of partners, details of partners, name of firm, nature of business, profit sharing ratio and other terms and conditions of the partnership.

3. Payment of Stamp Duty: - The partnership deed must be printed on non-judicial stamp paper of an appropriate value, it varies from state to state and stamp duty is to be paid by the firm.

4. Submission of Documents: - Partners have to provide partnership deed and prescribed forms to the registrar of firms, this form contains all the required details of partners and business.

5. Verification and Registration: - The registrar of firms will verify all the details and documents provided by the partners, if it satisfies the registrar then the partnership deep is stamped and returned to the partners

Documents

• PAN cards and addresses proof of all partners
• Photos of partners
• Business Adress 
• Proposed name of the business 

Fees

To be updated.

Timeline

In order to complete the process of an unregistered partnership, it takes usually 1 to 3 working days after submitting all the required documents.

FAQs