partnership firm

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 August 2010 suppose two partner creat a partner ship namly AB interprise, at the end of the year there was Rs 4000000/- as a income,they distributed 50:50, then my Question is who will pay the tax on Rs 4 lacs, AB Interprise, or partners on his shared incomed,

Ratan Sharma

Ratan Sharma (Expert)
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12 August 2010 Its the firm who is liable to pay the tax. If the firm fails to pay the tax then it can be recovered from its partners. The liability of the partner is jointly & severally. Its not restricted to 50% each. If tax can not be recovered from one partner then it can be recovered from other partner.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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12 August 2010 The firm will pay tax on the profit.

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Querist : Anonymous

Querist : Anonymous (Querist)

12 August 2010 my question was that would AB Interpris has to pay the tax or partner will pay acoding to profit ratio or AB Int. will pay IT and after it also patners will pay IT on his share income

Aditya Maheshwari

Aditya Maheshwari (Expert)
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12 August 2010 The firm will pay tax on income of the firm and the tax will be divided amongst the partners.

Share of profit received from the firm by the partners is exempt u/s 10(2A). Hence no tax in the hands of the partner.