Agreement

Profit Sharing Agreement

A profit sharing agreement that governs how net profits (and losses) of a joint venture or business arrangement are computed and distributed.

PROFIT SHARING AGREEMENT

This Profit Sharing Agreement is made on [Date] between [Party A Name], residing/having office at [Address] ("First Party"), and [Party B Name], residing/having office at [Address] ("Second Party").

  1. Purpose. The parties have agreed to carry on/participate in [Business / Venture] and share the net profits thereof, with effect from the Effective Date.
  2. Capital Contribution. The First Party shall contribute Rs. [Amount] and the Second Party shall contribute Rs. [Amount] towards the venture.
  3. Net Profit Definition. "Net Profit" means revenue less all direct and indirect costs, expenses, depreciation and applicable taxes for the relevant period.
  4. Profit Sharing Ratio. Net Profit shall be shared in the ratio of [Percentage]% to the First Party and [Percentage]% to the Second Party.
  5. Loss Sharing. Any losses shall be borne by the parties in the same ratio as the profit sharing ratio.
  6. Drawings. Neither party shall draw amounts in excess of its entitlement without the written consent of the other.
  7. Books of Account. Proper books of account shall be maintained and finalised at the end of each financial year.
  8. Distribution. The share of profits shall be distributed within [Number] days of finalisation of accounts for each period.
  9. Taxes. Each party shall bear its own income tax on its share of profits and comply with applicable TDS provisions.
  10. Governing Law & Jurisdiction. This Agreement shall be governed by Indian law and subject to the exclusive jurisdiction of the courts at [City].

IN WITNESS WHEREOF, the parties have signed this Profit Sharing Agreement on the date first written above.

___
For [Party A Name]
___
For [Party B Name]
___
Witness 1
___
Witness 2

Before you use it — fill in / check

  • Party 1
  • Party 2
  • Scope/consideration
  • Effective date

How to use this template

  1. Read through and replace every [bracketed] or blank placeholder with your actual details.
  2. Delete any clause that doesn't apply and add anything specific to your situation.
  3. Click Print / Save as PDF to download, or Copy text to paste into your letterhead.
  4. Get it signed / stamped / notarised as required, and keep a copy for your records.

This is a general, editable template for convenience only — not legal advice. For anything material, have a professional review it. TaxClue isn't liable for how it's used.