Direct and Indirect Taxation · Computation of GST Liability

Liability of Partners of a Firm to Pay GST (Section 90)

Updated 10 October 2026 · Fact-checked

Under Section 90 of the CGST Act, when a firm owes tax, interest or penalty, the firm and every partner are jointly and severally liable, whatever the partnership contract says. A retiring partner stays liable for dues up to the date of retirement. If notice of retirement is not given within one month, liability continues until the Commissioner receives it.

Understand Liability of Partners of a Firm to Pay Tax

A partnership firm is a taxable person that can be registered under GST. If it fails to pay tax, interest or penalty, the department does not have to chase only the firm. Section 90 makes the firm and each partner liable together.

The liability is joint and several. This means the department can recover the whole amount from the firm, or from any one partner, or from all of them. A partner cannot say, "I own only 20% of the firm, so I owe only 20%." Partners can settle that between themselves later, but the department is not bound by it.

The section applies notwithstanding any contract to the contrary and any other law. So a clause in the partnership deed that limits a partner's liability does not bind the tax department.

Retirement is dealt with in two provisos. A partner who retires remains liable for tax, interest or penalty due up to the date of retirement, whether it was determined on that date or only later. To fix that date for the department, the retiring partner or the firm must intimate the date of retirement to the Commissioner by written notice.

If no intimation reaches the Commissioner within one month from the retirement date, the retiring partner's liability does not stop at the retirement date. It continues until the date on which the Commissioner receives the intimation. Under Section 94, an LLP is also treated as a firm for this Chapter.

Key rules to remember

General rule (Section 90): Firm liable ⇒ Firm + each partner = jointly and severally liable; Applies to tax, interest or penalty, notwithstanding any contract to the contrary and any other law.
First proviso: retiring partner: Retired partner liable for dues up to the date of retirement (determined or not on that date); Requires written intimation of the retirement date to the Commissioner by the partner or the firm.
Second proviso: late intimation: No intimation within 1 month of retirement ⇒ liability continues until the date the Commissioner receives the intimation; The one month runs from the date of retirement.
LLP treated as firm: LLP under the LLP Act, 2008 = firm (Section 94, Explanation); So the Chapter's firm provisions extend to an LLP.

How to solve Liability of Partners of a Firm to Pay Tax questions

Use this method for any question on partner liability when a firm defaults or a partner retires.

1Identify the taxable person: confirm it is a firm (or an LLP, which is treated as a firm for this Chapter).
2Identify what is due: tax, interest or penalty, and the period to which each relates.
3State the general rule: the firm and every partner are jointly and severally liable, regardless of the partnership deed.
4Check for a retired partner: note the retirement date and whether the dues relate to a period up to that date or after it.
5Check intimation: was written notice of the retirement date given to the Commissioner, and was it within one month of retirement?
6Apply the proviso: with timely notice, liability ends at the retirement date. Without it, liability runs until the Commissioner receives the notice.
7Conclude clearly: name who can be asked to pay and for what period, and mention that partners can adjust among themselves.

Quickest way: Three-check shortcut for Section 90 questions

When to use it: Use it in MCQs and short-note questions where you must decide quickly who is liable.

Check 1: Is it a firm? If yes, firm and all partners are jointly and severally liable.
Check 2: Did a partner retire? If no, stop. All current partners are liable.
Check 3: Was the Commissioner told within one month? If yes, the retired partner is liable only up to the retirement date. If no, liability continues until the Commissioner receives the notice.

Common mistakes in Liability of Partners of a Firm to Pay Tax

Saying each partner is liable only in proportion to profit share.
Students carry over the idea of sharing from the partnership deed.
Fix: Remember joint and several means the whole amount can be recovered from any one partner. Profit shares matter only between partners.
Believing a clause in the partnership deed can limit liability to the department.
Students treat the deed as overriding everything.
Fix: Quote the words notwithstanding any contract to the contrary and any other law. The deed binds partners among themselves only.
Saying a retired partner is free of all liability from the day of retirement.
Students ignore that earlier dues stay, even if determined later.
Fix: The retired partner remains liable for dues up to the retirement date, whether determined on that date or not.
Ignoring the one-month intimation condition.
Students remember only the first proviso.
Fix: Always test the timing. If no intimation within one month of retirement, liability continues until the Commissioner receives it.
Making the retired partner liable for dues of periods after retirement when notice was given on time.
Students confuse the extended liability with the normal case.
Fix: With timely intimation, liability stops at the retirement date. Extension arises only for late intimation.
Quoting Section 90 for dissolution or death cases.
All are 'liability in certain cases' provisions and look similar.
Fix: Section 90 covers firm liability and retirement. Dissolution is in Sections 93(3) and 94, and transfer of business is in Section 85.

Worked examples

Example 1

Ram, Shyam and Mohan are partners in R&S Traders, Pune. The firm owes CGST of ₹3,00,000 for a period and has not paid. The partnership deed says each partner is liable only for one-third of any tax dues. Who can the department recover the amount from, and how much?

Show the solution

The taxable person is a firm and it is liable to pay tax.
Under Section 90, the firm and each partner are jointly and severally liable.
The deed clause is a contract and Section 90 applies notwithstanding any contract to the contrary.
So the department can recover the full ₹3,00,000 from the firm, or from any one partner, or from all of them.
Between themselves, partners may adjust the amount by their one-third arrangement, but that does not bind the department.

Answer: The department can recover the whole ₹3,00,000 from the firm or from any one partner. The deed clause does not limit liability against the department.

Example 2

Anita retired from partnership firm Sharma & Co. on 31 July. The firm owes tax of ₹2,00,000 for periods up to 31 July, determined only in October. The firm informed the Commissioner in writing on 10 August. Later, tax of ₹50,000 arose for a period after 31 July. State Anita's liability. Then state how it would change if the notice had been given on 15 September.

Show the solution

Anita is a retiring partner, so the provisos to Section 90 apply.
Notice was given on 10 August, within one month of retirement (by 31 August).
So her liability is for tax, interest or penalty due up to 31 July, even though it was determined only in October.
The ₹2,00,000 relates to periods up to 31 July, so she is jointly and severally liable for it.
The ₹50,000 arose after her retirement, so she is not liable for it.
If notice were given on 15 September, it would be beyond one month.
Her liability would then continue until the date the Commissioner received the notice, 15 September, assuming that is the date of receipt.
Dues for periods up to that date would then also be recoverable from her, including the ₹50,000.

Answer: With timely notice, Anita is liable for the ₹2,00,000 up to 31 July, not for the ₹50,000. With notice received on 15 September, liability continues until that date and would cover the ₹50,000 as well.

Exam tips

In MCQs, look for the words joint and several. They signal that the full amount can be recovered from any partner.
Memorise the one-month rule and what happens if it is missed. Many questions are built on that single condition.
For written answers, quote the opening words notwithstanding any contract to the contrary and state both provisos in order.
Do not mix Section 90 with Sections 85, 93 and 94. Name the correct section for retirement, dissolution and transfer cases.
Show dates clearly in a small timeline. It earns step marks and avoids errors on the one-month test.

Practice questions from Computation of GST Liability

Liability of Partners of a Firm to Pay Tax in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Applied SkillsPartners' Authority and Liability

Liability of Partners of a Firm to Pay Tax: frequently asked questions

Who is liable to pay GST when a partnership firm defaults?

Under Section 90 of the CGST Act, the firm and each of its partners are jointly and severally liable for tax, interest or penalty. The department can recover from the firm or from any partner. This applies even if the partnership deed says otherwise.

Is a retired partner still liable under GST?

Yes, for dues up to the date of retirement, whether or not they were determined on that date. The partner or the firm must give written notice of the retirement date to the Commissioner. Dues of later periods are not the retired partner's liability when notice is timely.

What if the retirement is not intimated within one month?

The retired partner's liability continues until the date on which the Commissioner receives the intimation. The one month is counted from the date of retirement. So late notice extends the period for which the partner can be held liable.

Does Section 90 apply to an LLP?

For this Chapter, an LLP registered under the Limited Liability Partnership Act, 2008 is considered a firm, as per the Explanation to Section 94. So the firm provisions are read as covering an LLP.