Introduction
Partnership Firm Taxation has always been a key aspect of Indian tax law. With Clause 324 in the new Income Tax Bill, 2025, taxpayers must understand how it aligns with or differs from the current Section 167A of the Income-tax Act, 1961. This blog breaks down the changes and compliance essentials in a simple way.
Clause 324 vs. Section 167A: What’s New?
Clause 324 of the Income Tax Bill, 2025 mirrors Section 167A of the 1961 Act but updates certain procedural aspects for clarity and compliance.
| Particulars | Section 167A (Old) | Clause 324 (New Bill) |
|---|---|---|
| Applicable To | Partnership Firms including LLPs | Same scope maintained |
| Tax Rate | 30% on total income | No change: 30% continues |
| Surcharge | 12% if income > ₹1 crore | Same limit retained |
| Health & Education Cess | 4% | Unchanged |
| Filing Requirement | Return under Section 139 | Return under Clause 153 |
Expert Tip:
Check your Partnership Deed — profit-sharing ratio must be clearly defined. Ambiguous deeds often attract higher scrutiny and disallowance of deductions.
Key Compliance Points for Partnership Firms
Under Clause 324, firms must:
- File returns on time (Clause 153)
- Maintain books as per Clause 36
- Pay advance tax (Clause 208)
- Get accounts audited if turnover exceeds limits (Clause 44)
Penalty Risks:
Non-compliance may attract penalty under Clause 270A (under-reporting) and Clause 271B (for audit defaults).
Frequently Asked Questions
Q1. What is the Partnership Firm Taxation rate under Clause 324?
30% plus surcharge and cess, same as the old regime.
Q2. Can a firm opt for the new tax regime?
Yes, but conditions apply under Clause 115BAC.
Q3. Is LLP taxation the same as partnership firms?
Yes, LLPs are treated similarly under Clause 324.
Summary
Partnership Firm Taxation under Clause 324 of the Income Tax Bill, 2025 continues the existing 30% rate and compliance framework of Section 167A of the 1961 Act. Firms must ensure timely filing, clear profit-sharing deeds, and proper audits to avoid penalties.
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