Section 329 of the Income-tax Act, 2025

Section 329 — Joint and several liability of partners for tax payable by firm. Successor to s.188A of the 1961 Act.

Where this section sits

Section 329 is in Chapter XVII — Special Provisions Relating to Certain Persons, which runs from section 302 to section 355.

← Section 328 · Section 330 →

What this section does

One sentence with a wide reach. Every person who was a partner of a firm during the tax year, and the legal representative of any such person who is deceased, is jointly and severally liable along with the firm for the amount of tax, penalty or other sum payable by the firm for that tax year; and all the provisions of the Act apply, so far as may be, to the assessment of that tax or the imposition or levy of that penalty or other sum.

Why it is there

A firm's liability would otherwise stop at the firm, and a firm can be wound up or left without assets. Making everyone who was a partner during the year jointly and severally liable keeps the demand recoverable from the persons who carried on the business in the year it arose.

Who it applies to

Every person who was a partner of the firm at any time during the tax year
The legal representative of a deceased person who was such a partner
The firm itself, which remains liable

What this means in practice

The test is membership during the tax year, not at the date of the demand, so a partner who retired during or after that year remains liable for that year, and a partner who joined during the year is caught too. Liability is joint and several, so the whole amount can be recovered from any one of them, not a share proportionate to the profit-sharing ratio. It extends beyond tax to penalty and "other sum payable by the firm", and the second limb applies the Act's provisions so far as may be to the assessment or the imposition of the penalty, not merely to recovery.

An example

Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.

A firm is assessed and a demand of Rs. 60 lakh of tax and penalty is raised. Two of its four partners had retired before the demand was raised but were partners during that tax year. All four remain jointly and severally liable with the firm for the whole Rs. 60 lakh, recoverable in full from any one of them rather than in profit-sharing ratio.

Where you meet this section

You meet it when a demand raised on a firm is pressed against you personally as a partner or as a deceased partner's legal representative — in the recovery notice, and in proceedings for assessment or penalty in which the Act's provisions are applied to you under this section.

The words themselves

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

Section 329, Income-tax Act, 2025.

What people get wrong

Assuming retirement ends the exposure. Liability attaches to every person who was a partner during the tax year, whenever the demand is raised.
Treating the liability as proportionate to the profit-sharing ratio. It is joint and several.
Reading it as covering tax alone. It extends to penalty and any other sum payable by the firm for that tax year.
Assuming death ends the liability. The legal representative of a deceased partner is expressly included.

What this replaced

The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.

188A - Joint and several liability of partners for tax payable by firm

See the full 1961 to 2025 concordance.

What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.