Partnership Firm Registration in Pune

A partnership firm is an organization which is formed with two or more persons to run a business with a view to earn profit. These firms are governed by the Indian Partnership Act, 1932. Following are the characteristics of Partnership Firm:

1. Number of Partners : Minimum number of persons required to start a partnership firm is two and maximum limit is
2. Contractual relationship : A written agreement known as partnership deed which is signed by all the partners, binds them in a contractual relationship.
3. Voluntary Registration : Partnership Firm is registered with Registrar of Firms (ROF).
4. Sharing of Profits and Losses : Profits and Losses of the partnership firm are shared by the partners in the ratio mentioned in the partnership deed. In case no such ration is specified, then profits and losses are shared equally.
5. Unlimited Liability : Liability of partners of a partnership firm is unlimited. They are jointly held liable for the debts and losses of the firm.
6. Legal Status : Partnership firm has no distinct legal status separate from its partners. However, it is a separate person for taxation purposes.
7. Taxation of Partnership Firms: From Net Profit of the firm, Interest on Partners’ Capital & Remuneration to Partners is allowed as deduction. Tax on interest & remuneration has to be paid by the partners as per their individual slabs. Tax on remaining profits has to be paid by the partnership firm at the rate of 30%.
8. Interest & Remuneration to Partners: Interest on Partners’ Capital is allowed at a maximum rate of 12% p.a. Remuneration to working partners is allowed as follows:

a) On first Rs. 3,00,000 of the Profit or in case of loss; 90% of profit or Rs. 1,50,000/- whichever is higher

b) On remaining profit, 60% of the profit

Trusts/NGOs:

A trust is a not-for profit organization working for social welfare & religion. Trusts receive funds by way of donations from general public and spend the money on the purposes for which trust is formed. Trust is governed by the trust deed which specifies its objects, areas of work, details of trustees, administration & management of trust funds, etc.

Registration with Charity Commissioner:

A trust has to be registered with charity commissioner. Also a trust has to file its audited accounts with charity commissioner on annual basis.

Registration u/s 12AA/12AB of Income Tax Act:

If a trust is registered u/s 12AA/12AB of Income Tax Act, then it’s income is exempt from tax subject to a condition that its spends 85% of total receipts on the objects of the trust.

Registration u/s 80G of Income Tax Act:

After obtaining registration u/s 12A, trust can apply for registration u/s 80G. With this registration, a person who gives donation to the trust gets income tax benefits.

Section 8 Company:

Company registered u/s 8 of the Companies Act, 2013 is a not-for profit organization working for social welfare. Trusts receive funds by way of donations from general public and spend the money on social welfare issues like relief to poor, education, health care, sports, etc.

It is similar to the trust but it is not required to get registered with charity commissioner & also not required to file annual accounts with charity commissioner. It can directly apply for registrations u/s 12A & 80G of Income Tax Act immediately after its formation.

Initial costs of formation of section 8 company is higher than that for a trust but it saves time & costs for registration and compliance with charity commissioner.

Section 8 company has to file it annual audited financials with Registrar of Companies (ROC)