A Partnership Firm is a popular form of business constitution for businesses that are owned, managed and controlled by an Association of People for profit. Partnership Firms are required to file their income tax return each year. Under the Income Tax Act, the Partnership firm is treated as an entity separate from the Partners of the firm. Both registered partnership firms and unregistered partnership firms are required to file their income tax return. Only those partnerships that have a written partnership deed can be assessed as a Partnership Firm. It is more beneficial to be assessed as a Partnership Firm than as an Association of Persons as certain deductions allowed for Partnerships are not allowed for Association of Persons and the tax liability could be higher.
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