Chapter XVII - Special Provisions Relating to Certain Persons
Section 329
Section 329: joint and several liability of partners for a firm's tax
Section 329 makes the partners of a firm personally responsible, alongside the firm itself, for the firm's tax dues for a given tax year. It is a short but important provision that widens who the tax department can recover a firm's tax liability from.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
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.
Introduction
Section 329 makes partners of a firm jointly and severally liable for tax, penalty and other specified sums payable by the firm for the relevant period.
Key takeaways
Relevant-year partners are covered
Every person who was a partner during the tax year is jointly and severally liable with the firm for its tax, penalty or other sum for that year.
A deceased partner's representative is named
The legal representative of a partner who has died is also included in the section's liability rule.
The liability is broader than base tax
Section 329 expressly refers to tax, penalty and other sums payable by the firm for that tax year.
What Section 329 says
"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."
Who this covers
Two categories of people become jointly and severally liable, along with the firm itself, for the firm's tax, penalty or other sum for the tax year:
- Every person who was a partner of the firm during that tax year
- The legal representative of any such partner who has since died
What "jointly and severally liable" means in practice
The tax department is not limited to recovering the firm's dues only from the firm's own assets - it can pursue any partner (or a deceased partner's legal representative) individually for the full amount, and all the provisions of the Act apply, so far as may be, to the assessment of that tax and to the imposition or levy of any penalty or other sum.
Step-by-step flow for applying Section 329
- 1
What amount is payable by the firm, and for which tax year?
Section 329 covers tax, penalty or other sum payable by the firm for the tax year.
- 2
Who was a partner of the firm at any time during that tax year?
Every person who was a partner during the tax year is covered, even if the person has since left the firm.
- 3
Has any such partner died?
- Yes: The partner's legal representative is also liable under Section 329. Check Section 302(4) on the extent of a legal representative's liability. Go to the next step.
- No: Go to the next step.
- 4
Apply joint and several liability
Each such person (or legal representative) is jointly and severally liable along with the firm. The firm's dues can be recovered from the firm or from any one or more of them.
- 5
Apply the assessment and penalty provisions
All the provisions of the Act apply, so far as may be, to the assessment of such tax and the imposition or levy of such penalty or other sum. Section 329 does not say how partners share the burden among themselves.
Practical checklist
Do
- Identify the period in which each person was a partner and the firm demand to which liability relates.
- Keep evidence of firm payments to avoid duplicate recovery.
Avoid
- Assume liability is capped automatically at each partner’s profit-sharing percentage.
Illustrative example
Worked example: a partner who retired mid-year
Hypothetical facts (illustration only, not a real taxpayer): A firm had partners A, B and C during a tax year. C retired in November of that year. The firm's assessed tax for that year remains unpaid at an assumed ₹3,00,000. A died after the year ended.
Identify the dues
The firm owes ₹3,00,000 (assumed) for that tax year.
Identify the persons liable
A, B and C were all partners during the tax year. C's retirement in November does not take C outside Section 329.
Deceased partner
A has died, so A's legal representative is liable under Section 329, subject to Section 302(4).
Effect of joint and several liability
The ₹3,00,000 may be recovered from the firm, B, C or A's legal representative, alone or together, until the full amount is paid. Section 329 does not divide it into shares.
Outcome
- B and C are each liable, along with the firm, for the full ₹3,00,000; A's legal representative is liable subject to Section 302(4).
- Any internal sharing among the partners is outside Section 329.
Frequently asked questions
Can the tax department recover a firm's tax dues from an individual partner?
Yes. Section 329 makes every person who was a partner of the firm during the relevant tax year jointly and severally liable, along with the firm, for the firm's tax, penalty or other sum for that year.
What if a partner has died?
The legal representative of a deceased partner is also jointly and severally liable, along with the firm, in the same way as a surviving partner.
Need help applying this provision to your situation?
Understand partner liability for firm tax dues with our tax teamLast updated 9 October 2026