partner's remunaration
This query is : Resolved
02 January 2010
HI,
In which head of income partner's remunaration should be taken?
If suppose it is taken in Business profession then any expenditure can he claim?
And what should the entry of share of profit of partner passed by partnership firm?
In which head of income partner's remunaration should be taken?
If suppose it is taken in Business profession then any expenditure can he claim?
And what should the entry of share of profit of partner passed by partnership firm?
02 January 2010
Dear Rupesh
As per Sec 40(b) of IT Act, Partners are eligible for Remuneration subject to ceiling mentioned in the said section or agreed by partners in Partnereship Deed whichever is lower, Partner's Remuneration should be Debited to P/L A/c as indirect Exps. & credited to Partner's Capital A/c
2) Profit has Credit Bal. so Debit the P/L A/c so that P/L A/c get Closed & Credit to Partner's Capital A/c (in Profit Sharing Ratio)
As per Sec 40(b) of IT Act, Partners are eligible for Remuneration subject to ceiling mentioned in the said section or agreed by partners in Partnereship Deed whichever is lower, Partner's Remuneration should be Debited to P/L A/c as indirect Exps. & credited to Partner's Capital A/c
2) Profit has Credit Bal. so Debit the P/L A/c so that P/L A/c get Closed & Credit to Partner's Capital A/c (in Profit Sharing Ratio)
02 January 2010
In the return of income of partners, remuneration from the firm need to be disclosed and offered for taxation under the head "profit and gains of business or profession".
03 January 2010
agree
04 January 2010
Dear Rupesh I agree with above reply, but think some part of your query is still unreply. Partner in his return can claim expenses against the remunaration and interest income received from partnership firm provided he has incurred such expenses to earn such income.
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