13 April 2016
Can I know whether interest on drawings of partners is taxable in the hands of firm?If yes,then shall it be taken into a/c for calculating book profits u/s 40 (b)?
13 April 2016
If the firm pays interest to a partner and the partner pays interest to the firm on his drawings, then the interest shall not be netted off. The interest received by the firm from the partners on their drawings is taxable in the hands of the firm as income under head Profits & Gains of Business or Profession. The interest paid by the firm to the partners is allowable as per Section 40(b)
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