Generate a partnership deed draft setting out capital contribution, profit sharing, and roles between business partners.
A partnership deed is a written agreement between two or more people who agree to run a business together and share its profits. In India, partnerships are governed by the Indian Partnership Act, 1932, which does not strictly require a written deed — an oral partnership is technically valid — but a written, signed deed is essential in practice, since it is the only reliable evidence of what the partners actually agreed to regarding capital, profit sharing, responsibilities, and what happens if a partner leaves or the business needs to be wound up.
Without a written partnership deed, disputes over capital contribution, profit share, or decision-making authority become very difficult to resolve, since there is no documented reference point. A written deed also carries practical benefits: banks typically require a partnership deed to open a current account in the firm's name, the Income Tax Department requires it for PAN registration and to recognise the firm as a distinct assessee, and registering the firm with the Registrar of Firms (which requires a deed) gives partners the ability to sue third parties in the firm's name — a right unregistered firms do not have under Section 69 of the Partnership Act.
Enter the proposed firm name, the nature of business, the registered office address, and details for each partner — name, address, capital contribution, and profit-sharing percentage — one partner per line. The tool assembles a complete partnership deed covering capital contribution, profit and loss sharing, bank account operation, management rights, accounting requirements, and what happens if a partner retires, dies, or becomes insolvent. Everything is generated locally in your browser.
The capital contribution clause should precisely state how much each partner is contributing and in what form (cash, assets, or a combination) — this becomes the basis for calculating each partner's capital account. The profit-sharing ratio clause need not mirror the capital contribution ratio; partners are free to agree on any split, for instance rewarding a partner who contributes more time or expertise with a higher share even if their capital contribution is lower. The retirement/death clause is often overlooked but critically important — without it, under default Partnership Act rules, a partnership may be deemed dissolved automatically when a partner exits, which can be highly disruptive to an ongoing business; explicitly stating that the firm continues with the remaining partners avoids this.
A partnership deed isn't a one-time document — it should be revisited whenever there's a material change, such as a new partner joining, a change in profit-sharing ratio, or a shift in the nature of business. These changes are typically documented through a supplementary deed, which should also be filed with the Registrar of Firms if the original deed was registered.
While registration under the Indian Partnership Act is not mandatory, it is strongly recommended. To register, partners submit the partnership deed along with a prescribed application form and fee to the Registrar of Firms in the state where the firm's principal place of business is located. Registration provides important legal protections, most notably the ability for the firm and its partners to sue other parties to enforce contracts, and it also makes it easier to open bank accounts, apply for licences, and obtain GST registration in the firm's name.
No, an oral partnership is technically valid under the Indian Partnership Act, 1932, but a written deed is essential in practice for opening bank accounts, tax registration, and avoiding disputes over terms.
Registration is optional but highly recommended — an unregistered firm cannot sue third parties to enforce a contract, while a registered firm can.
Yes, partners are free to agree on any profit-sharing ratio regardless of their capital contribution, as long as it's clearly stated in the deed.
This depends on what the deed states — a well-drafted deed includes a clause specifying that the firm continues with remaining partners after settling accounts with the outgoing partner, rather than automatically dissolving.
Stamp duty varies by state and is often based on the total capital contribution stated in the deed — check your state's Stamp Act or consult a local document writer for the exact amount.
Idiot Legal Tools