Step wise Registration process of Partnership Deed in Maharashtra and challenges

Step wise Registration process of Partnership Deed in Maharashtra and challenges

A partnership deed is a written agreement between two or more partners willing to undertake business jointly. It consist of all the terms & condition agreed by the respective partners ie, their capital introduced, profit sharing ratio, kind of partners, about the nature of business, working of the firm, dissolution/liquidation of the firm& so on.

                   Initially the process of registration in the state of Maharashtra was done manually and not system driven, however recently this process has changed to online in Maharashtra. The registration formality needs to be completed online with uploading of various Scan Documents and generating online Application form.

Following is the Step Wise process for the registration of a firm:

1.    To Register New Website of Registrar of Firms

·         Go to page www.rof.maharashtra.gov.in/‎

·         Create a User ID (New ID is required for Each Firm).

·         Click on the option advocate or individual as per your status

·         Fill in the respective details as required i.e., your name, address, contact no, email id etc and register yourself the screen will give you a password,

·         Change the Password at the time of first login

2.    To Raise Form A (application for Registration)

·         In Firm Management Tab click Raise Form “A”.

·         Fill in the required information, like Partnership name, Business Address, etc

·         Fill the column in Marathi properly by conversion in marathi.

§  E.g. (a) for Providing Service one should type seva puravine

§  (b) Selling Consumable items one should type Grahakapayogee Vastunchee Vikree.

·         Click on the Option ADD PARTNERS to add the partners & fill in his/her respective details, check whether the partner is a major or a minor.

·         Scan and Uplaod the following documents:- (Compulsory attachment)

1.            Certified True Copy of Partnership Deed (Certified by C.A. or Advocate).

2.            Certified True Copy of Marathi Translation of Partnership      Deed (Certified by C.A. or Advocate).

3.            Blank Stamp Paper of Rs. 10/- in the name of Partner or firm.

4.            Authority letter signed by all partners if documents are submitted by C.A. or Advocate.

5.            Covering letter with Rs.5/- Court Fee Stamp.

6.            Demand Draft of Rs. 1600/-

·         Click Submit Tab.

·         Take print out of Form “A” on Green Ledger Paper.

·         Sign  Before designated  authority  like Notary & submit  the attested form along with all the above documents to the designated office of Registrar.

·         Bandra office address:  Registration of firms, Maharashtra state, Mumbai, new administrative building, 6^th floor, near Chetna college, government colony, Labour court, near Babasaheb Ambedkar Udyan Mumbai- 400051, contact no- 26551149/26559881.

·         Get the documents verified by the person sitting on the counter.

·         Note: behind the DD any one partners name and contact number is to be mentioned.

·         After he/she ticks it as OK you can submit the DD and all the required documents to the respective person and get the acknowledgement on the copy of covering letter and authority letter. Along with this acknowledgement of DD paid ie Rs 750 will be provided. Registration procedure is completed at this stage.

The Biggest Challenge is to convert in Marathi language in the software which the website operates. The site is slow, key board provided in Marathi is not user friendly. Substantial time is taken to understand keys and punch it error free.

For any query you can write to Chirag@cachauhan.in . Before making any decisions do consult your Professional / tax advisor.  Author do not take any responsibility for misrepresentation or interpretation of act or rules. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document nor for any action taken in reliance there on.

Profits can't be taxed in the hands of partners

We also bring to you latest news from Tax in India. Below is the article published in one of the News Tabloid in India.

In what could bring a major relief to partnership companies, the Income-Tax department is set to clarify that the income of a firm that has been exempted from tax cannot be taxed for its profit in the hands of its partners.

Earlier, even if the income chargeable to tax for a firm was nil due to certain deductions and exemptions, some assessing officers levied tax on the profit credited to its partners. This led to disputes and some taxpayers challenged this in courts.

“After looking into the issue, the Central Board of Direct Taxes (CBDT) has decided to clarify that such income in the hands of partners will be completely exempt,” said a senior finance ministry official.

The official said the partners that had already paid taxes on such income might be allowed to get refunds or adjustments against their future tax liability (but there are only a few such cases).

The move came after CBDT received representations in connections with interpretation of provisions of Section 10 (2A) of the Income-Tax Act. According to this section, inserted by the Finance Act, 1992, a tax partner is not liable to tax again on his share in the total income of the firm.

“The position is clear but the language of the section in the law created difficulty... The ambiguity will be cleared with this clarification. It will certainly provide a lot of relief to promoter companies and others from the consequences of unintended taxation,” said Deloitte Partner N C Hegde.

The profit of a partnership firm is divided among its partners in sync with their partnership deal. For the purpose of computation of income tax, identities of a partner and the firm are co-terminus. This means assets and liabilities are not different. The profits are credited to a partner’s account and he can plough it back into the business. It is more of a book entry, as no cash is generally drawn out of the company. Therefore, the income of partners was made tax exempt in 1993 to avoid double taxation.

As some assessing officers interpreted the section differently and started levying taxes on partners’ profits, clarifications were sought as to what amount would be exempt in the hands of partners in cases where a firm had claimed exemptions or deductions. The firm is taxed at 30 per cent plus surcharge and applicable tax and the partners’ profit is also taxed at the same rate.

“The income of a company is to be taxed in the in the hands of the company alone. This can, under no circumstances, be taxed in the hands of its partner,” says a CBDT circular that is likely to be made public soon.

However, partners’s interest income from capital in account and the remuneration they receive from the company will continue to be taxable according to the provisions of the I-T Act.

PUTTING TAX IN ORDER

* The law

A partner is not liable to be taxed again on its share in a partnership company. Since the income of the firm is already chargeable to tax, taxing again in the hands of partners could lead to double taxation

* The problem

Some tax authorities misinterpreted it and started taxing the profits in the hands of partners where a firm’s tax liability became nil due to certain exemptions and deductions

* The solution

CBDT will clarify that the entire profit credited to partners’ accounts in a firm will be exempt from tax, even if the firm’s taxable income becomes nil on account of exemptions.