Partner's remuneration

This query is : Resolved

Trainee (Querist)
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17 May 2016 Is there any limit on payment of remuneration to Partners??. Under which head, partner has to show in his personal computation ??..

CS Advocate Abhishek Goyal

CS Advocate Abhishek Goyal (Expert)
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17 May 2016 Yes limits are set out under section 40b(v) any excess payment will be deemed to be the income of the firm. Partner shall show remuneration under the head income from business or profession.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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17 May 2016 Yes,u/s 40(b)(v) deduction allowed within the percentage prescribed based on book profit.

Upto 3 lakh book profit or loss . Salary allowed Rs.150000/-@ 90% of profit which ever is higher.

Balance @ 60%. Of book profit allowed as salary to partners.

Partner has to file ITR -3. Separate column to declare salary, share of profit and interest on capital. Same will be taxable if exceed taxable limit.

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Neeraj Sharma

Neeraj Sharma (Expert)
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17 May 2016 as per Income Tax Act 1961 ,u/s 40(b)(v) deduction allowed within the percentage prescribed based on book profit. Upto 300000 book profit or loss . Salary allowed Rs.150000/- @ 90% of profit whichever is higher. Balance @ 60%. Of book profit allowed as salary to partners.

Trainee

Trainee (Querist)
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19 May 2016 How will be excess amount treated both in Firm & Partner case ??..

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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19 May 2016 Excess amount issued as salary will be disallowed and same will be taxable in the hands of Firm.

Trainee

Trainee (Querist)
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19 May 2016 Excess amount issued, called as drawing or salary??

Trainee

Trainee (Querist)
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19 May 2016 And what if salary issued is more than one mentioned in partnership deed??