Drafting partnership deed - salary clause ?

This query is : Open

SUNNY (Querist)
Follow

18 August 2017 Hello

Let say if you using below clause for remuneration, is it still required to specify a figure for salary to working partners?

"The remuneration payable to the working partners above shall be credited to their respective accounts on ascertainment of book profits. The total remuneration/bonus shall not extend as per the limits laid down under clause 5 of section 40 (b) of the I.T. Act 1961 , and the above calculation of the remuneration is also subject to variation, if any changes made under clause 5 of section 40 (b) of the Income Tax Act , 1961."

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
Follow

18 August 2017 Seems insufficient. Please see CBDT Circular 739 dated 25.3.1996 and finalize the remuneration clause accordingly.

SUNNY

SUNNY (Querist)
Follow

18 August 2017 I found the circular here
https://incometaxindia.gov.in/Communications/Circular/910110000000000020.htm

Now only 60%of profit is allowed as total salary that can be withdrawn , so how can we decide how much salary should be withdrawn in the deed at the start of FY? Can someone help me in drafting the deed please.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now