Partnership Firms in India are governed by the Indian Partnership Act, 1932. As per the definition provided under Section 4 of the Indian Partnership Act :-
“Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all”.
Various Underlying Features of an Indian Partnership Firm -
1) A Partnership firm is not considered to be a separate legal entity distinct from its partner members. It is merely a collective name given to the group of business partners.
2) A Partnership firm comes into being pursuant to a contract between two or more persons. It does not arise from status, operation of law or inheritance.
3) Partners can be individuals, Company, HUF. A partnership firm, not being a separate legal entity, cannot enter into a partnership contract with another partnership firm.
4) Personal Liability of partners towards the outsiders shall be unlimited.