Stamp Paper for partnership firm change new income tax 2025
This query is : Resolved
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Kollipara Sundaraiah
(Querist)
16 April 2026
sir,
Is there is need to change partnership deed on new stamp paper due to substitute of Income tax Act ,1961 to New Income Tax Act,2025. As Act as well as partnership interest and remuneration clause has been changed. Interest and remuneration to partner in erstwhile Act were allowed under section 40 (b) whereas in new Income Tax Act ,2025 these are allowed under section 35 (e) - Stamp Paper
Is there is need to change partnership deed on new stamp paper due to substitute of Income tax Act ,1961 to New Income Tax Act,2025. As Act as well as partnership interest and remuneration clause has been changed. Interest and remuneration to partner in erstwhile Act were allowed under section 40 (b) whereas in new Income Tax Act ,2025 these are allowed under section 35 (e) - Stamp Paper
16 April 2026
You do not necessarily need to execute a brand-new partnership deed on new stamp paper solely because of the transition from the Income-tax Act, 1961 to the Income Tax Act, 2025.
However, you likely should execute a Supplementary Deed on new stamp paper to update your remuneration and interest clauses to ensure you can claim the newly increased deduction limits.
However, you likely should execute a Supplementary Deed on new stamp paper to update your remuneration and interest clauses to ensure you can claim the newly increased deduction limits.
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16 April 2026
Under standard "Repeal and Savings" provisions (Section 536 of the new Act), references to Section 40(b) in existing deeds will generally be read as referring to the corresponding Section 35(e) of the Income Tax Act, 2025.
Your current deed remains legally valid for defining the relationship between partners.
To claim the higher deduction limits (e.g., the revised ₹3,00,000 threshold instead of ₹1,50,000), tax authorities often require the deed to explicitly authorize the specific amounts or the specific "current" Act's limits.
Your current deed remains legally valid for defining the relationship between partners.
To claim the higher deduction limits (e.g., the revised ₹3,00,000 threshold instead of ₹1,50,000), tax authorities often require the deed to explicitly authorize the specific amounts or the specific "current" Act's limits.
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16 April 2026
You should execute a Supplementary Deed (which requires new stamp paper) if:
If your current deed says "Salary of ₹10,000 per month," you cannot claim a higher amount under the new Act without an amendment.
While legally "saved," having a deed that refers to a repealed Act can lead to administrative hurdles with banks, the Registrar of Firms, or during tax audits.
The 2025 Act increases the allowable remuneration. To maximize this tax benefit, a supplementary deed should be executed to align with the new limit structure.
If your current deed says "Salary of ₹10,000 per month," you cannot claim a higher amount under the new Act without an amendment.
While legally "saved," having a deed that refers to a repealed Act can lead to administrative hurdles with banks, the Registrar of Firms, or during tax audits.
The 2025 Act increases the allowable remuneration. To maximize this tax benefit, a supplementary deed should be executed to align with the new limit structure.
14 November 2026
No fresh deed is needed only because the 1961 Act was replaced. Here is the legal basis.
1. References carry over automatically. Under Sec 8 of the General Clauses Act 1897, where a Central Act is repealed and re-enacted, references in any instrument to the repealed provision are read as references to the re-enacted provision. So a deed clause saying 'remuneration/interest as allowable under Sec 40(b) of the Income-tax Act 1961' is read as referring to the corresponding provision of the Income-tax Act 2025. The repeal-and-savings provisions of the 2025 Act support the same continuity.
2. What actually matters for the deduction (unchanged in substance):
• Remuneration only to working partners, authorised by the deed, with either the amount or the method of computing it specified.
• Interest on capital up to 12% a year, as authorised by the deed.
• Remuneration within the limits on book profit. These limits were raised by Finance (No.2) Act 2024 to the higher of ₹3 lakh or 90% on the first ₹6 lakh, and 60% of the balance, and carried into the 2025 Act.
3. When a supplementary deed is worth doing:
• If the deed fixes old rupee amounts or old limits and you want the higher limits.
• If it doesn't specify the method of computing remuneration.
• If you want to update references for clarity.
Execute it on stamp paper as per your state's Stamp Act, and update the deed with the bank and the Registrar of Firms if required.
Overall Summary: Old-Act references in a partnership deed continue to work under the 2025 Act through Sec 8 of the General Clauses Act, so no new deed is required. Execute a supplementary deed only to adopt the higher remuneration limits or to fix vague computation clauses.
1. References carry over automatically. Under Sec 8 of the General Clauses Act 1897, where a Central Act is repealed and re-enacted, references in any instrument to the repealed provision are read as references to the re-enacted provision. So a deed clause saying 'remuneration/interest as allowable under Sec 40(b) of the Income-tax Act 1961' is read as referring to the corresponding provision of the Income-tax Act 2025. The repeal-and-savings provisions of the 2025 Act support the same continuity.
2. What actually matters for the deduction (unchanged in substance):
• Remuneration only to working partners, authorised by the deed, with either the amount or the method of computing it specified.
• Interest on capital up to 12% a year, as authorised by the deed.
• Remuneration within the limits on book profit. These limits were raised by Finance (No.2) Act 2024 to the higher of ₹3 lakh or 90% on the first ₹6 lakh, and 60% of the balance, and carried into the 2025 Act.
3. When a supplementary deed is worth doing:
• If the deed fixes old rupee amounts or old limits and you want the higher limits.
• If it doesn't specify the method of computing remuneration.
• If you want to update references for clarity.
Execute it on stamp paper as per your state's Stamp Act, and update the deed with the bank and the Registrar of Firms if required.
Overall Summary: Old-Act references in a partnership deed continue to work under the 2025 Act through Sec 8 of the General Clauses Act, so no new deed is required. Execute a supplementary deed only to adopt the higher remuneration limits or to fix vague computation clauses.
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