A partnership is a business relationship entered into by a formal
agreement between two or more persons or corporations carrying on a
business in common. The capital for a partnership is provided by the
partners who are liable for the total debts of the firms and who
share the profits and losses of the business concern according to
the terms of the partnership agreement.
Partnerships (other than banking companies) are generally limited in
size to twenty partners. The interest of a partner is transferable
only with the prior consent of the other partner(s). However, a
partner's right to a share of the partnership income may be received
in trust for another person.
For taxation purposes, partnerships are classified into:
(i) Registered Firms
(ii) Unregistered Firms
The income of the registered firm is subject to Super Tax before
distribution to the partners. Also the individual income of the
partners is subject to income tax at the usual rates.
For unregistered firms, income tax is levied on the firm's income
and the partners are not liable to pay tax on the shares of profit
received from the unregistered firm(s).