GST For Partnership

GST For Partnership

A Partnership is a legal relationship formed by the agreement between two or more individuals to carry on a business as co-owners. A partnership, as distinguished from a corporation, is not a separate entity from the individual owners. The partnership income tax is paid by the partnership, but the profits and losses are divided among the partners, based on their agreement. Partnerships are usually registered with the state in which they do business, but the requirement to register varies from state to state.

There are two types of Partnership firms, registered and un-registered Partnership firm. It is not compulsory to register a Partnership firm; however, it is advisable to register a Partnership firm due to the added advantages.

Image Title

Advantages of Partnership Firm

Easy Formation

General partnerships require very little paperwork. Unlike corporations, partnerships can operate in multiple states without getting a new permit for each state. Usually, general partnerships must abide by fewer regulations and are under less government supervision than corporations.

Less compliance

General Partnerships do not need to appoint an auditor or, if unregistered, even file annual accounts with the registrar. Annual compliances are also fewer as compared to an LLP. General Partnerships do need to file Income Taxes and, depending on turnover, service and sales tax.

Audit NOT Required

A Partnership firm is not required to file audited financial statements with the Ministry of Corporate Affairs each year. Therefore, audit of financial statements is not required. However, tax audit may be required for a Partnership firm if the turnover exceeds a prescribed limit which is one Crore for the Financial year ending March 31st 2015 & 2016.

GST Partnership Registration Procedure

The General Partnership Registration procedure is very simple, if you prompt with your all documents, this process can be completed in 5 working days, subject to legal processing time.

  • Thestartuppoint Financial Experts will first understand your business, partners, partnership structure and other relevant information. The information collected will be used by our Experts to Draft partnership Deed.

  • As no formal registration is required to start up proprietorship. Therefore, our professional adviser consults you to incorporate a proprietorship through other Government registration.

  • Every business needs a registered Permanent Account Number (PAN) and Tax Account Number (TAN). We will make the application online ourselves; you need to provide the all required Documents. The PAN and TAN will be couriered to your registered office address in 21 working days.

Frequently Asked Questions of Partnership

A minimum of two Persons is required to start a Partnership firm. A maximum number of 20 Partners are allowed in a Partnership firm.
Partnership firms are registered by the Registrar of Firms, under the Indian Partnership Act, 1932.
There is no limit on the minimum capital for starting a Partnership firm. Therefore, a Partnership firm can be started with any amount of minimum capital.
PAN Card for the Partners along with identity and address proof is required. It is recommended to draft a Partnership deed and have it signed by all the Partners in the firm.
To open a bank account for a Partnership firm, a registered Partnership deed along with identity and address proof of the Partners need to be provided.
The Partner must be an Indian citizen and a Resident of India. Non-Resident Indians and Persons of Indian Origin can only invest in a Proprietorship with prior approval of the Government of India.
It is not necessary for Partnerships to prepare audited financial statements each year. However, a tax audit may be necessary based on turnover and other criterion.
An address in India where the registered office of the One Person Company will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.
Yes, there are procedures for converting a Partnership business into a Company or a LLP at a later date. However, the procedures to convert a Partnership firm into a Company or LLP are cumbersome, expensive and time-consuming. Therefore, it is wise for many entrepreneurs to consider and start a LLP or Company instead of a Partnership firm.
Partnership firm will have to file their annual tax return with the Income Tax Department. Other tax filings like service tax filing or VAT/CST filing may be necessary from time to time, based on the business activity performed. However, annual report or accounts need not be filed with the Ministry or Corporate Affairs, which is required for Limited Liability Partnerships and Companies