Partnership Firm in India

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 August 2010 Hi,
I would like to know that is it mandatory to mention salary/remuneration of partners in a partnership deed. What are the advantages and disadvantages of doing this. Also why is this done.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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20 August 2010 It is not mandatory to mention remuneration to partner in partnership deed.

If the same is not mentioned u canot pay salary to partners. So it is done.

The advantage of giving salary is that the profits gets split between the firm and partners and partners also have some income in their hands and the rate of tax on individuals is less than that of partnership.

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Querist : Anonymous

Querist : Anonymous (Querist)

20 August 2010

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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20 August 2010 w. e. f. 01.04.2009 maximum permissible limit for remuneration is
“(a) on the first Rs. 3,00,000 of the book-profit or in case of a loss Rs. 1,50,000 or at the rate of 90 per cent of the book-profit, whichever is more;
(b) on the balance of the book-profit at the rate of 60 per cent”.

Interest rate maximum is 12% on capital.

Both are optional. If not mentioned on the deed then it cannot be paid.

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