Book Profit 6915/- of the partnership firm for the financial year 2009-10 Please guide me how much remuneration to partner eligible and how much amount to be transfer to partners capital account and how much to be shown in profit and loss account of partnership firm for financial year 2009-10
08 November 2010
Partners remunaration can be paid upto Rs 1.5 lakhs or as per partnershipdeed which ever is lower.- Sec 40b of Income Tax Act1961 Partners interest can also be provided @ 12.00% or as per Partnership deed whichever is lower.
If this is the first year of business started, then you need to submit the certified copy of the Patnership deed along with the return of income.
If you have already (Partners interest & remuneration) provided in the books & arrived the profit of Rs.6915/- then add back the numbers to the profit & arrived figure is "Book Profit". First adjust the interest on partners capital & then compute the maximum eligible salary to WORKING PARTNERS. If the book profit is loss Rs.150000 is allowed as partners salary, if profit is more then, Rs150000/- or 90% of the book profit (upto Rs 3lakhs)is allowed. If the book profit is even more than 3 lakhs then Rs150000 + 60% on balance book profit exceeding Rs 3lakhs.
I hope you are little bit clear. If you require further more details, pl feel free to ask again......
CAclubindia
