Partnership Firm Compliance — Annual Tax, GST & Registrar Filings
A partnership firm files nothing with the MCA, yet its year is full: books, ITR-5, a tax audit where it applies, TDS on partner pay, GST returns and Registrar of Firms updates. For FY 2025-26 the ITR is due 31 August 2026, or 21 November 2026 if audited.
What it is
Partnership firm compliance means the returns, tax payments and records a firm owes every year. It is lighter than company compliance because a firm under the Indian Partnership Act, 1932 is not registered with the MCA. No AOC-4, no MGT-7.
The work sits with three authorities instead: the Income Tax e-filing portal (return, tax audit, advance tax, TDS), the GST portal, and your state’s Registrar of Firms for changes in partners, name or place of business.
Returns for FY 2025-26 still follow the Income-tax Act, 1961; tax year 2026-27 onwards falls under the Income-tax Act, 2025.
Who it applies to
Registered firms
Every firm on the Registrar of Firms’ record. Just finished your partnership firm registration? Compliance runs from the date of the deed.
Unregistered firms
An unregistered firm has the same ITR, TDS and GST duties, and cannot sue to enforce its contracts under Section 69.
Firms with nil or low turnover
A quiet year still needs an ITR, and GST returns if the firm holds a GSTIN. Think of a Ballabgarh trading firm that paused work after a partner retired: the GSTIN stays live, so nil returns keep falling due every month.
Why it matters
Partner pay stays deductible
Interest and remuneration to partners are deductible only within legal limits, and only if the deed authorises them.
Clean records for banks
Lenders ask for three years of ITRs, accounts and GST returns before sanctioning a limit.
Partners carry the risk
Under Section 25, partners are jointly and severally liable for the firm’s acts. A tax demand on the firm can reach their personal assets.
Documents required
Firm records
- Partnership deed and every supplementary deed
- Registration certificate from the Registrar of Firms, if registered
- Firm PAN, TAN and GSTIN
Books and bank
- Bank statements for all accounts
- Sales and purchase invoices, expense bills
- Partners’ capital account entries
Partner details
- PAN and Aadhaar of each partner
- Remuneration and interest working as per the deed
- Dates of any partner change
Partnership firm compliance calendar
| Compliance | Law / form | Due date |
|---|---|---|
| Advance tax | Income-tax Act | 15 June, 15 September, 15 December, 15 March (15%, 45%, 75%, 100%) |
| TDS deposit | Challan on the e-filing portal | 7th of the next month (30 April for March) |
| Quarterly TDS statement | Form 140 (earlier 26Q) | 31 July, 31 October, 31 January, 31 May |
| GST returns | GSTR-1 and GSTR-3B | Monthly, or quarterly under QRMP |
| Tax audit report (FY 2025-26) | Section 44AB | 21 October 2026 (extended) |
| ITR (FY 2025-26) | ITR-5, or ITR-4 for presumptive income | 31 August 2026; 21 November 2026 if audited |
| GST annual return (FY 2025-26) | GSTR-9 | 31 December 2026; optional up to ₹2 crore |
| Change in partners or name | Sections 60–63, Indian Partnership Act | When the change happens |
The firm pays tax at 30% plus 4% cess, with a surcharge once income crosses ₹1 crore. Profit share is exempt in the partner’s hands; interest and remuneration are taxed as the partner’s business income.
In practice, the date that trips most firms is the new TDS on partners. A Faridabad firm that credits monthly salary to two working partners crosses ₹20,000 per partner within the first month or two, and TDS is due from that point.
How it works
Read the deed before the year starts
We read the remuneration and interest clauses and set up the year’s calendar. Many older deeds say nothing about partner salary. In that case the firm cannot claim it, so we fix the deed first.
Run the books and GST every month
We maintain the books, file GSTR-1 and GSTR-3B, and match input tax credit with GSTR-2B.
Deduct and deposit TDS
We compute TDS on rent, contractors and partners, deposit it and file the quarterly TDS statements.
Close the accounts and book the audit
We close the books, fix partner remuneration within the limits and coordinate the tax audit with a practising CA, who signs the audit report, if turnover calls for one.
File the ITR and the annual GST return
We file ITR-5, share each partner’s figures for their own return, and file GSTR-9 where needed.
Timelines
File by 31 August without audit
From FY 2025-26, a firm without audit files its ITR by 31 August 2026.
File by 21 November 2026 with audit
For FY 2025-26, CBDT extended the tax audit report to 21 October 2026 and the ITR to 21 November 2026.
Use 31 December 2026 as the last resort
A missed FY 2025-26 return can be filed until 31 December 2026, with late fee and interest; business losses then cannot be carried forward.
What happens if you miss it
Late fee and interest on the ITR
A late return attracts a late fee of up to ₹5,000 (₹1,000 if total income is within ₹5 lakh) and interest of 1% a month on unpaid tax.
Penalty for missing the tax audit
Section 271B allows a penalty of 0.5% of turnover, up to ₹1.5 lakh, if a firm that needed an audit does not get one done in time.
TDS defaults hit twice
A late TDS statement costs ₹200 a day. Here is the catch: skip TDS on partner interest or remuneration and part of that expense can be disallowed too.
Frequently asked questions
Does a partnership firm have to file anything with the MCA?
No, a partnership firm under the Indian Partnership Act, 1932 files nothing with the MCA or the ROC. Its annual compliance is with the Income Tax Department, the GST portal and the state Registrar of Firms. Only an LLP files annual forms on the MCA portal, Form 11 and Form 8. So if your structure is a firm, your calendar is built around the ITR, the tax audit, TDS and GST, which keeps it simple.
Which ITR form does a partnership firm file?
A partnership firm files ITR-5. A firm other than an LLP may use ITR-4 instead if it is resident, its total income is up to ₹50 lakh and it opts for presumptive taxation. For FY 2025-26, the due date is 31 August 2026 for firms without audit and 21 November 2026 for firms that need a tax audit.
When does a partnership firm need a tax audit?
A firm in business needs a tax audit when its turnover exceeds ₹1 crore in the year. The limit rises to ₹10 crore if cash receipts and cash payments are each within 5% of the total. A firm in a profession needs an audit above ₹50 lakh of gross receipts. For FY 2025-26 the audit report is due 21 October 2026, so book the audit early.
Is TDS deductible on salary and interest paid to partners?
Yes. Since 1 April 2025 a firm deducts TDS at 10% on salary, remuneration, commission, bonus and interest paid or credited to a partner, once the total for that partner crosses ₹20,000 in the year. From 1 April 2026 this sits in Section 393(3) of the Income-tax Act, 2025, in place of Section 194T. Share of profit and capital withdrawals are not covered, so ordinary drawings carry no TDS.
How much remuneration can a firm pay its partners?
The deductible limit is worked out on book profit. On the first ₹6 lakh of book profit, or a loss, the firm can deduct ₹3 lakh or 90% of book profit, whichever is higher. On the balance, the limit is 60%. Interest on capital is deductible up to 12% simple a year. Both must be authorised by the deed and paid to working partners, so a well-drafted deed saves tax every year.
Do we need to tell the Registrar of Firms when a partner leaves?
Yes, for a registered firm. Section 63 of the Indian Partnership Act, 1932 provides for recording a change in the firm’s constitution, such as a partner joining or retiring, with the Registrar of Firms. Section 60 covers a change in the firm name or principal place of business. Check with your state’s Registrar of Firms whether it takes the filing online or at the office. Recording the change protects the outgoing partner from future liabilities of the firm.
Does a partnership firm have to file GSTR-9?
Only if its aggregate turnover is above ₹2 crore. Filing GSTR-9 is optional for taxpayers with turnover up to ₹2 crore. For FY 2025-26 the due date is 31 December 2026. Below the limit, the regular GSTR-1 and GSTR-3B still continue. We reconcile the year’s returns with the books either way, so assessments hold no surprises.
Do partnership firms in Haryana pay professional tax?
No. Haryana does not levy professional tax, and neither does Delhi. A Faridabad or Gurugram firm therefore has no professional tax registration or return. A branch in a state that does levy it registers under that state’s law. We check every place of business in the deed, so nothing is missed.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
Filing an ITR, TDS statement or GST return on time carries no government fee. Delay is what costs: the ITR late fee, ₹200 a day on a late TDS statement, and GST late fees with interest.
Ready to begin?
Send us your deed and last year’s ITR, and we will map your firm’s compliance calendar for the rest of the year.