Partnership Deed Drafting in India: Define Profit Share, Roles and Exit Terms in Writing
Running a partnership firm on a verbal understanding is legal - but it's a dispute waiting to happen. A Partnership Deed puts capital contribution, profit-sharing, roles, and exit terms in writing, and an unregistered firm loses important legal rights. This guide covers what your deed must contain and how KanoonPe drafts one correctly.
Quick summary
- What it is: A written document setting out the terms of a partnership between two or more persons carrying on a business together.
- Governed by: Indian Partnership Act, 1932.
- Best for: Two or more individuals starting or formalising a jointly-run business.
- KanoonPe price: Flat, all-inclusive quote on a free callback · Delivery: 2–3 working days.
Quick facts
| Detail | Information |
|---|---|
| Governing law | Indian Partnership Act, 1932 |
| Registration with Registrar of Firms | Not compulsory, but strongly recommended |
| Stamp duty | Payable under the respective state Stamp Act; varies by state and capital contribution |
| KanoonPe price | Flat, all-inclusive quote - request a free callback |
| Delivery timeline | 2–3 working days |
| Who needs it | Two or more partners starting or formalising a jointly-run business |
What is a Partnership Deed?
A Partnership Deed is a written legal document that records the terms agreed between two or more partners carrying on a business together, including capital contribution, profit-and-loss sharing ratio, roles, and rights of each partner. It is governed by the Indian Partnership Act, 1932, and forms the foundational contract of a partnership firm in India.
While a partnership can technically exist on an oral agreement, a written deed is essential for opening a current bank account, applying for a PAN in the firm's name, resolving disputes, and proving each partner's rights and obligations. Registering the firm with the Registrar of Firms, while optional under the Act, is strongly advisable for legal protection.
Types of Partnership Deed
- General/simple partnership deed - standard terms for two or more partners sharing profit and management equally or as agreed.
- Deed with unequal capital or profit share - customised ratios reflecting different capital contributions or roles among partners.
- Deed for a specific project/venture - partnership formed for a defined project or time period, dissolving on completion.
- Deed admitting or retiring a partner - a supplementary deed used when the partner composition of an existing firm changes.
Key clauses a Partnership Deed should contain
- Name, nature and place of business - the firm's name, business activity, and principal place of business.
- Partners' details and capital contribution - names, addresses, and the capital each partner brings in.
- Profit and loss sharing ratio - how profits and losses are divided among partners.
- Roles and duties - each partner's responsibilities, working vs sleeping partner status.
- Interest on capital and drawings - whether partners earn interest on capital or pay interest on drawings.
- Admission, retirement and expulsion of partners - the process for changes in partnership composition.
- Dispute resolution - arbitration or mediation mechanism for disagreements between partners.
- Dissolution clause - how and when the firm can be wound up, and settlement of accounts.
Who should use a Partnership Deed
- Two or more individuals starting a jointly-owned, unincorporated business.
- Existing oral partnerships that need to formalise terms in writing to avoid future disputes.
- Family businesses where clarity on capital, roles, and succession prevents conflict.
- Firms adding or removing a partner, requiring a fresh or supplementary deed.
Information and documents needed to draft a Partnership Deed
- Full names, addresses, and PAN of all partners
- Proposed firm name and principal place of business
- Nature of business activity
- Capital contribution of each partner
- Agreed profit and loss sharing ratio
- Roles, duties, and decision-making authority of each partner
- Bank signing authority and terms for admission/retirement of partners
Ready to get started? Talk to a verified expert → - get a transparent, all-inclusive quote for your Partnership Deed within one business hour.
Drafting and delivery process
- Share your requirements. Tell us the partners, capital contribution, and profit-sharing ratio via a short form.
- Lawyer drafts the deed. A commercial lawyer prepares a deed covering capital, roles, dispute resolution, and dissolution terms.
- Review and revisions. You review the draft; one round of revisions is included to adjust ratios or clauses.
- Finalisation. The final deed is shared, ready for execution on stamp paper.
- Stamping and registration (if opted). The deed is executed on state-specific stamp paper and, if you choose, we assist with registration at the Registrar of Firms and PAN application for the firm.
Partnership Deed cost in India
| Cost component | What drives it |
|---|---|
| Lawyer drafting fee | Number of partners, capital/profit-sharing complexity, custom clauses |
| Stamp duty | Separate state-government cost - varies by state and capital contribution, not included in the drafting fee |
| Registrar of Firms registration (optional) | Separate government fee, varies by state |
| Revisions | One round included |
KanoonPe's drafting price is a flat, all-inclusive quote covering the legal drafting fee - stamp duty and any Registrar of Firms registration fee are separate state-government charges paid at actual, as they vary by state.
Delivery timeline
| Stage | Typical time |
|---|---|
| Requirement gathering | Same day |
| First draft | 1 working day |
| Review & finalisation | 1–2 working days |
| Total (drafting) | 2–3 working days |
| Registration with Registrar of Firms (if opted) | Additional 1–3 weeks, state-dependent |
Stamping and registration notes
Registration of a partnership firm with the Registrar of Firms is not compulsory under the Indian Partnership Act, 1932, but it is strongly recommended: under Section 69 of the Act, an unregistered firm cannot sue a third party, or a partner sue the firm or fellow partners, to enforce a right arising from the partnership contract. Stamp duty on the deed is payable under the respective state's Stamp Act, and the amount varies by state and by the capital contributed - check your state's current stamp duty schedule, as this is a separate government cost, not part of KanoonPe's drafting fee. After execution, the firm should also apply for a PAN in its own name to open a bank account and file taxes.
Common mistakes and risks
- Relying on an oral partnership - makes profit-sharing, capital, and exit terms impossible to prove in a dispute.
- Skipping registration - an unregistered firm cannot sue third parties or partners to enforce contractual rights, per Section 69.
- No dispute resolution clause - partner disagreements end up in prolonged litigation instead of arbitration.
- Undefined profit-sharing on unequal capital - assuming an equal split by default when contributions were unequal, leading to conflict.
- No exit or dissolution clause - makes it unclear how to settle accounts if a partner wants to leave or the firm needs to wind up.
- Forgetting to update the deed - not executing a supplementary deed when a partner is added or retires.
Why choose KanoonPe
- Transparent flat pricing - one all-inclusive drafting fee, with stamp duty and registration charges disclosed separately at actual.
- Filed-on-time or refund - every drafting order carries a written delivery SLA.
- One accountable case owner - a dedicated lawyer manages your deed from brief to execution.
- Live status tracking - track drafting, stamping, and registration status in your dashboard.
Trusted by 50,000+ businesses, rated 4.7/5, with 500+ verified CAs, CS and lawyers.