Remuneration to partners

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 April 2016 Hi,
There are 4 designated partners in a firm A,B,C,D. There profit sharing ratio 20:20:30:30. Out of these only C and D are the working partners.Please advise how I draft Remuneration Clause in Partnership Agreement as per section 40(b) of the I.T. Act.

Rupesh Jain

Rupesh Jain (Expert)
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29 April 2016 you have insert that mr .. Mr .. will working partners and remuneration to be given in ration ......... as per income tax act 1961 section 40(b)

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Querist : Anonymous

Querist : Anonymous (Querist)

29 April 2016 Thanks Rupesh Ji, Actually I am little confused that in this case partner A and B will not withdraw the salary. So the total remuneration payable as per sec. 40(b) will be debited in Profit and Loss account or only 60% ?

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Amol S Joglekar

Amol S Joglekar (Expert)
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29 April 2016 yo can pay remuneration to partners. The remuneration paid to working partners will be allowed as per the limit set out in the income tax act. The rest will be disallowed. There is no bar as such in paying remuneration to non working partners except s above.

Murtaza I Bhagat

Murtaza I Bhagat (Expert)
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29 April 2016 There is no issue regarding non withdrawal of Remuneration. If you are paying them then you can take it in P&L and also calculate allowed remurenation as per sec 40(b).