Joint and several liability of partners for tax payable by firm
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Every person who was, during the tax year, a partner of a firm, and the legal representative of any such person who is deceased, shall be jointly and severally liable along with the firm for the amount of tax, penalty or other sum payable by the firm for the tax year, and all the provisions of this Act, so far as may be, shall apply to the assessment of such tax or imposition or levy of such penalty or other sum.
FAQs on Section 329 of Income Tax Act 2025
What does Section 329 of the Income Tax Act, 2025 provide for?
Section 329 establishes that every person who was a partner of a firm during a tax year, along with the legal representative of any such deceased partner, is jointly and severally liable for the firm’s tax, penalty, or other sums due under the Act for that year.
Who is held liable under Section 329?
All individuals who were partners in a firm during the relevant tax year and the legal representatives of any such deceased partner are liable jointly and severally with the firm.
What is meant by ‘joint and several liability’ in the context of Section 329?
‘Joint and several liability’ means that the tax department can recover the entire amount of tax, penalty, or other sum due from any one or more of the partners or their legal representatives, not just the firm itself.
Does the liability under Section 329 apply even if a partner has retired during the tax year?
Yes, if a person was a partner at any time during the tax year, they are liable under Section 329 for that year, even if they retired before the year ended.
Are legal representatives liable for tax dues under Section 329?
Yes, legal representatives of a deceased partner are jointly and severally liable for the firm’s tax dues for the relevant tax year.
Is the liability under Section 329 limited to the share of profit or ownership of the partner?
No, the liability is not limited to the partner’s share; it is joint and several, meaning the entire amount due from the firm can be recovered from any one partner or legal representative.
Does Section 329 also apply to penalties and other sums besides tax?
Yes, Section 329 applies to tax, penalties, and any other sums payable by the firm for the tax year.
Are the provisions of the Act applicable for assessment under Section 329?
Yes, all relevant provisions of the Income Tax Act, 2025 shall apply to the assessment, levy, or imposition of such tax, penalty, or other sum as per Section 329.
If a partner was unaware of certain transactions, can they avoid liability under Section 329?
No, liability under Section 329 does not depend on the partner’s knowledge of transactions. It arises solely from their status as a partner during the tax year.
Is there any protection for a newly joined partner in the same tax year under Section 329?
No, any person who was a partner at any time during the tax year is covered under the liability provisions, regardless of when they joined.
Can a firm’s tax liability be enforced even if the firm has been dissolved?
Yes, Section 329 allows enforcement of tax dues even after dissolution, by holding former partners and legal representatives liable jointly and severally.
