Partnership firm annual compliance in Tezpur
- Governing lawIndian Partnership Act, 1932
- Registrar filingsNone annually
- Place of businessTezpur, Assam
- Tax rateFlat 30%
Partnership firm annual compliance in Tezpur is the yearly set of obligations a firm constituted under the Indian Partnership Act, 1932 must complete. What makes it distinctive is what is absent: unlike an LLP or a company, a firm has no annual return, no ROC form and no registrar filing fee, whether it is based in Tezpur or anywhere else. Every recurring obligation sits under the tax statutes. This page covers the compliance calendar, how a firm is taxed, the Section 40(b) partner remuneration ceiling, the Section 194T TDS obligation that began on 1 April 2025, when a Section 44AB audit is triggered, the penalties for default, and how the load compares with an LLP and a company.
The one change that has reshaped this area is Section 194T. Effective from 1 April 2025, it requires a firm to deduct TDS at 10% on salary, remuneration, commission, bonus or interest paid to a partner, once aggregate payments to that partner cross ₹20,000 in a financial year. For decades, payments from a firm to its own partners sat outside TDS entirely. Across the 900+ firms we service, this is the obligation most frequently missed in the first year it applied, usually because the firm treats a partner drawing as a capital withdrawal rather than a payment attracting deduction.
A second change is structural. The Income-tax Act, 2025 came into force on 1 April 2026 and governs FY 2026-27 onward, renumbering familiar provisions: Section 44AB becomes Section 63, and the partner-payment TDS obligation continues as Section 393(3). For the year currently being assessed, FY 2025-26, the Income Tax Act, 1961 and its section numbers still apply. Explore partnership firm registration or read the registration guide.
Zero registrar filings Light on filings, strict on deadlines
The absence of registrar filings is genuine relief, but it also means nothing external prompts the firm. Every deadline is self-tracked, and the costliest one is the ITR-5 date that governs loss carry-forward.
- No annual return, no ROC form, no MCA fee
- Registrar of Firms, Assam notified only on constitution changes
- ITR-5 by the due date is what preserves losses under Section 80
Legal framework
Constitution: Indian Partnership Act, 1932 | Registration: Section 58 with the Registrar of Firms, Assam; Section 69 bars an unregistered firm from suing | Taxation:Income Tax Act, 1961 for FY 2025-26, Income-tax Act, 2025 from FY 2026-27 | Return: ITR-5 | Portal:incometax.gov.in
The compliance calendar for a firm in Tezpur
Nothing here is filed with a registrar. Everything is tax-side, self-tracked, and enforced through interest, fees and lost carry-forwards.
| Obligation | Due date | Form | Consequence of default |
|---|---|---|---|
| Advance tax, first instalment (15%) | 15 June | Challan 280 | Interest under Section 234C |
| TDS return, Q4 of the previous year | 31 May | Form 24Q / 26Q | ₹200 per day under Section 234E |
| TDS return, Q1 | 31 July | Form 24Q / 26Q | ₹200 per day under Section 234E |
| ITR-5, non-audit cases | 31 July | ITR-5 | ₹5,000 fee plus loss of carry-forward |
| Advance tax, second instalment (45%) | 15 September | Challan 280 | Interest under Section 234C |
| Section 44AB tax audit report | 30 September | Form 3CA or 3CB with 3CD | 0.5% of turnover, up to ₹1,50,000 |
| TDS return, Q2 | 31 October | Form 24Q / 26Q | ₹200 per day under Section 234E |
| ITR-5, audit cases | 31 October | ITR-5 | ₹5,000 fee plus loss of carry-forward |
| GSTR-9 annual return (turnover above ₹2 crore) | 31 December | GSTR-9 | Late fee and interest under GST law |
| Advance tax, third instalment (75%) | 15 December | Challan 280 | Interest under Section 234C |
| TDS return, Q3 | 31 January | Form 24Q / 26Q | ₹200 per day under Section 234E |
| Advance tax, final instalment (100%) | 15 March | Challan 280 | Interest under Section 234B and 234C |
| Monthly TDS deposit, including Section 194T | 7th of the following month | Challan 281 | Interest at 1.5% per month |
| Registrar of Firms, Assam intimation | On any change in constitution | State-prescribed forms | Registered particulars become unreliable |
The deadline that actually hurts
The ITR-5 due date is not just about a ₹5,000 fee. Under Section 80, business losses and capital losses can be carried forward for 8 assessment years only if the return is filed by the Section 139(1) due date. A firm in Tezpur that files a loss year belatedly forfeits that shield permanently, which can be worth ₹3 lakh or more in future tax on a ₹10 lakh loss.
How a partnership firm is taxed
A flat rate, a ceiling on what partners can draw as a deductible expense, and an exemption that prevents double taxation of the same profit.
1. The firm pays 30% flat. A partnership firm in Tezpur is a separate assessee with no slab benefit and no basic exemption. Tax is 30% of total income, plus a 12% surcharge where income exceeds ₹1 crore, plus 4% health and education cess. Unlike a company, a firm cannot elect into the 22% regime under Section 115BAA or the 15% regime under Section 115BAB.
2. Partner remuneration is capped by Section 40(b). Remuneration is deductible only where the partner is a working partner, the deed authorises payment, and the amount stays within the ceiling. From AY 2025-26 that ceiling is ₹3,00,000 or 90% of book profit, whichever is higher, on the first ₹6,00,000 of book profit or in case of loss, and 60% of the balance. Interest on partner capital is deductible up to 12% per annum, again only if the deed provides for it.
3. The partner's share of profit is exempt. Under Section 10(2A) the share of profit is exempt in the partner's hands, because the firm has already been taxed on it. What the partner pays tax on is remuneration and interest received, reported as business income in ITR-3.
| Book profit (₹) | Maximum deductible remuneration (₹) | Basis |
|---|---|---|
| Loss | 3,00,000 | Flat floor in a loss year |
| 2,00,000 | 3,00,000 | Higher of ₹3,00,000 or 90% of ₹2,00,000 |
| 6,00,000 | 5,40,000 | 90% of the first ₹6,00,000 |
| 10,00,000 | 7,80,000 | 5,40,000 plus 60% of the ₹4,00,000 balance |
| 25,00,000 | 16,80,000 | 5,40,000 plus 60% of the ₹19,00,000 balance |
| 50,00,000 | 31,80,000 | 5,40,000 plus 60% of the ₹44,00,000 balance |
Because the firm pays 30% while an individual partner may sit in a lower slab, routing profit through deductible remuneration and interest is usually the more efficient structure, up to the Section 40(b) ceiling. That planning only works where the deed authorises it, which is why we reconcile the deed to the accounts before computing anything. Use the income tax calculator to model the split.
Pro tip: put the numbers in the deed, not the ledger
Section 40(b) requires that remuneration be authorised by, and quantified in accordance with, the partnership deed. A deed that merely says "partners may draw remuneration as mutually agreed" has repeatedly failed in assessment. Specify the method, the rate of interest on capital, and the effective date, and re-execute the deed whenever the arrangement changes.
The new TDS on partner payments
Effective 1 April 2025, a firm must deduct tax on what it pays its own partners. Most firms in Tezpur had never operated a TDS workflow on partner drawings before.
| Parameter | Position |
|---|---|
| Effective from | 1 April 2025 |
| Who deducts | Every firm, including an LLP, paying its partners |
| Payments covered | Salary, remuneration, commission, bonus and interest paid to a partner |
| Not covered | Share of profit, which is exempt in the partner's hands under Section 10(2A) |
| Rate | 10% |
| Threshold | Aggregate payments to that partner exceeding ₹20,000 in the financial year |
| Deposit due | 7th of the following month; 30 April for March deductions |
| Reporting | Quarterly Form 26Q, with Form 16A issued to the partner |
| Interest on late deposit | 1% per month for late deduction, 1.5% per month for late payment |
| Under the Income-tax Act, 2025 | Continued as Section 393(3) from FY 2026-27 |
Two practical points decide whether a firm gets this right. First, the ₹20,000 threshold is aggregate for the year, not per payment, so a firm crediting a partner ₹5,000 a month crosses it in month five and must deduct on the whole amount thereafter. Second, the obligation attaches at credit or payment, whichever is earlier, so a year-end journal entry crediting remuneration to a partner's capital account triggers deduction even though no cash moved.
Getting it wrong is expensive in a way that compounds. Non-deduction attracts interest at 1% per month, late deposit at 1.5% per month, and a late-filing fee of ₹200 per day under Section 234E for the Form 26Q return. Separately, 30% of the expenditure can be disallowed under Section 40(a)(ia) where tax was deductible and not deducted, which turns a TDS oversight into an income tax cost on the same amount.
The most common Section 194T error
Treating partner drawings as capital withdrawals and skipping deduction entirely. Whether a payment is remuneration or a capital withdrawal is determined by the deed and the accounting treatment, not by what it is called on the bank narration. If it is credited to the partner's current account as remuneration or interest, Section 194T applies.
Get your firm in Tezpur on a proper compliance calendar
From a ₹1,999 professional fee: books review, Section 40(b) computation, Section 194T partner TDS, ITR-5 filing and partner return coordination. No registrar fee applies.
When a Section 44AB audit applies
A firm has no statutory audit obligation. What it can have is a tax audit, triggered purely by turnover, receipts and the presumptive regime.
| Situation | Threshold | Audit required? |
|---|---|---|
| Business, cash receipts and payments above 5% | Turnover above ₹1 crore | Yes |
| Business, cash receipts and payments within 5% each | Turnover above ₹10 crore | Yes |
| Profession | Gross receipts above ₹50 lakh | Yes |
| Presumptive under Section 44AD, profit declared below 8% or 6% | Income above the exemption limit | Yes |
| Presumptive under Section 44ADA, profit declared below 50% | Income above the exemption limit | Yes |
| Business within the presumptive limits, profit declared at or above the rate | Turnover up to ₹2 crore (₹3 crore on the 5% cash test) | No |
| Profession within the presumptive limits, profit declared at or above 50% | Gross receipts up to ₹50 lakh (₹75 lakh on the 5% cash test) | No |
The audit report goes in Form 3CB with the particulars statement in Form 3CD, or in Form 3CA where the accounts are already audited under another law. For FY 2025-26 the report is due by 30 September 2026 and the return by 31 October 2026. Under the Income-tax Act, 2025, which governs FY 2026-27 onward, the same obligation sits in Section 63. Failure to obtain the audit attracts a penalty under Section 271B of 0.5% of turnover, capped at ₹1,50,000. See tax audit support.
The presumptive trap
Under presumptive taxation, partner remuneration and interest are not separately deductible. A firm declaring 8% of a ₹1 crore turnover as income under Section 44AD reports ₹8 lakh, and cannot then also deduct ₹5 lakh of partner remuneration from it. For firms in Tezpur that pay working partners meaningfully, regular assessment with books is often the lower-tax route even though it costs more to run.
How the annual cycle runs
Ten steps from closing the books to filing partner returns. The cycle starts in April and closes by 31 October at the latest.
Close and reconcile the books
Complete the books required under Section 44AA, reconcile bank, debtors, creditors and stock, and finalise the profit and loss account and balance sheet for the year ended 31 March. See bookkeeping support.
Reconcile the partnership deed to the accounts
Confirm the deed authorises the remuneration and interest actually credited, and that the profit-sharing ratio matches. An outdated deed is the most common reason a deduction fails in assessment.
Compute Section 40(b) allowable amounts
Apply the ceiling of ₹3,00,000 or 90% of book profit, whichever is higher, on the first ₹6,00,000, and 60% of the balance. Cap interest on partner capital at 12% per annum simple interest.
Run the Section 194T partner TDS workflow
Deduct 10% on partner remuneration and interest once aggregate payments cross ₹20,000 for the year, at credit or payment whichever is earlier, and deposit by the 7th of the following month.
File the quarterly TDS returns
Form 24Q for salaries, Form 26Q for other domestic payments including partner remuneration, Form 27Q for non-residents, by 31 July, 31 October, 31 January and 31 May. Issue Form 16 and Form 16A thereafter.
Pay advance tax on schedule
Where liability is ₹10,000 or more: 15% by 15 June, 45% by 15 September, 75% by 15 December, 100% by 15 March. Shortfalls attract interest under Section 234C.
Test Section 44AB applicability
Turnover above ₹1 crore (₹10 crore on the 5% cash test), professional receipts above ₹50 lakh, or presumptive income declared below the prescribed rate with income above the exemption limit.
Complete the tax audit where applicable
The auditor issues Form 3CA or 3CB with Form 3CD. For FY 2025-26 the report is due 30 September 2026, a month ahead of the return.
File ITR-5 for the firm
By 31 July in non-audit cases or 31 October in audit cases. Filing by the Section 139(1) due date is what preserves the carry-forward of losses under Section 80.
File partner returns and registrar intimations
Each partner files ITR-3 reporting remuneration and interest, with the share of profit exempt under Section 10(2A). Separately, intimate the Registrar of Firms, Assam of any change in partners, name or place of business.
What non-compliance costs
No registrar penalty exists for a firm, so every consequence arrives through the tax system. Two of them are permanent rather than payable.
| Default | Provision | Consequence |
|---|---|---|
| Late filing of ITR-5 | Section 234F | ₹5,000 (₹1,000 where total income is up to ₹5 lakh) |
| Belated return in a loss year | Section 80 | Business and capital losses cannot be carried forward, permanently |
| Non-payment or short payment of tax | Sections 234A, 234B and 234C | Interest at 1% per month on the shortfall |
| Failure to obtain a tax audit | Section 271B | 0.5% of turnover, up to ₹1,50,000 |
| Failure to deduct TDS, including Section 194T | Section 201(1A) | Interest at 1% per month; 1.5% per month for late deposit |
| Expenditure on which TDS was not deducted | Section 40(a)(ia) | 30% of the expenditure disallowed |
| Late filing of a TDS return | Section 234E | ₹200 per day until filed |
| Failure to maintain books | Section 271A | ₹25,000 |
| Firm not registered with the Registrar of Firms, Assam | Section 69, Indian Partnership Act | Cannot sue to enforce a contractual right |
| Unreported change in constitution | Indian Partnership Act | Registered particulars become unreliable in disputes and bank dealings |
Section 69 is the sleeper risk
An unregistered firm cannot file a suit to enforce a contractual right, and a partner cannot sue the firm or co-partners. Firms in Tezpur discover this at exactly the wrong moment, when a customer defaults and the firm finds it has no forum. If your firm is unregistered, fix it before you need it. See partnership firm registration.
Partnership firm vs LLP vs Pvt Ltd compliance
The compliance gap is the strongest reason for a business in Tezpur to stay a firm, and the liability gap is the strongest reason to leave.
| Parameter | Partnership firm | LLP | Private Limited Company |
|---|---|---|---|
| Governing law | Indian Partnership Act, 1932 | LLP Act, 2008 | Companies Act, 2013 |
| Annual registrar filing | None | Form 11 and Form 8 | AOC-4 and MGT-7 |
| Statutory audit | Not required | Above ₹40 lakh turnover | Always |
| Tax audit | Section 44AB thresholds | Section 44AB thresholds | Section 44AB thresholds |
| Income tax return | ITR-5 | ITR-5 | ITR-6 |
| Tax rate | Flat 30% | Flat 30% | 22%, 25% or 30% |
| Section 194T partner TDS | Yes | Yes | No |
| Liability of owners | Unlimited | Limited | Limited |
| Perpetual succession | No | Yes | Yes |
| Equity fundraising | No | Limited | Yes |
| Typical annual compliance cost | ₹1,999 to ₹18,000 | ₹5,000 to ₹15,000 | ₹12,000 to ₹35,000 |
| Best for | Small, closely held, stable businesses | Professional firms wanting limited liability | Businesses raising capital or scaling |
Explore: partnership to LLP conversion, partnership to Pvt Ltd conversion or dissolution of a partnership firm. For the structural trade-offs, read partnership firm vs LLP.
FAQs about partnership firm compliance in Tezpur
Questions sourced from real search queries, the Income Tax Act, the Indian Partnership Act, 1932 and our experience servicing 900+ partnership firms.
Put your partnership firm in Tezpur on autopilot
Talk to an IncorpX tax expert for a free consultation. Books, Section 40(b) computation, Section 194T partner TDS, tax audit coordination and ITR-5 filing from a ₹1,999 professional fee.
Nebin Binoy 
