Earlier in partnership interest paid and renumeration .

This query is : Open

Ashim kr Ray (Querist)
Follow

27 April 2018 Sir,

I have bit confusion in partnership firm,earlier there is deduction from Net profit i.e remuneration of partner, share of profit and Interest on capital and remaining profit Tax has to be paid.

But now i have heard i cannot deduct remuneration of partner and interest on capital from net profit is it right. Then how to take out share of profit.

Please explain this new rule.

RAJA P M

RAJA P M (Expert)
Follow

27 April 2018 In case the firm opt u/s 44AD then the Partners can't avail the remuneration and Interest...

Message likes : 1 times

CA Mayur Todmal

CA Mayur Todmal (Expert)
Follow

27 April 2018 only in case firm opting for 44ad , you can not avail other wise you can

Message likes : 1 times

Upgrade to CAclubindia Pro. Subscribe Now!

Anmol Davesar

Anmol Davesar (Expert)
Follow

27 April 2018 this provision is for persons opting for section 44AD.. otherwise above expenses are allowed provided they are within limits.

Message likes : 1 times

Ashim kr Ray

Ashim kr Ray (Querist)
Follow

28 April 2018 Sir,
If person opted 44AD did not get the benefit of deduction of remuneration to partner and interest on ,then how to calculate share of profit.

RAJA P M

RAJA P M (Expert)
Follow

28 April 2018 After paid tax liability you will transfer the profit amount to Partners current account. It's fully exempted in the hands of partners.

For Ex : In case Two persons in the firm...
Total Turn Over - Rs. 50,00,000
Profit @ 8% - Rs. 400,000...
You will share the profit Rs. 100,000 / each...

But.,
We must pay tax liability @ 30% + Cess - Rs. 123,600...

Message likes : 1 times

Ashim kr Ray

Ashim kr Ray (Querist)
Follow

28 April 2018 Sir,

How you have calculate profit Rs 100000 each.

Message likes : 1 times

Ashim kr Ray

Ashim kr Ray (Querist)
Follow

28 April 2018 Sir,
if no deduction of remuneration and interest on capital that means no requirement of current account of partners.Am i right Sir profit will directly transfer to Capital Account.

Upgrade to CAclubindia Pro. Subscribe Now!

RAJA P M

RAJA P M (Expert)
Follow

28 April 2018 (How you have calculate profit Rs 100000 each) That's wrongly typed. It's Rs 2lakhs...

Message likes : 1 times

RAJA P M

RAJA P M (Expert)
Follow

28 April 2018 Partners Current Account and Capital Account both are under Capital Nature... Normally it's better to prepare current account (Under Capital) Ledger...

Message likes : 1 times