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vijay deshmukh (Querist)
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28 January 2016 the tax liability on the total income before remuneration and interest ( 60000) of a professional firm is rs.1000000.after considering the dedication permissible u / s 40 ( b ), the tax payable by firm excluding education cess as will be. ....

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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28 January 2016 It is not clear the remuneration mentioned Rs. 60000 is per month or per annum, the computation hereunder is made assuming it is per month. Total remuneration per annum to the working partners will be Rs. 720,000. Out of this, based on book profits of Rs. 10 Lakhs, Rs. 690,000 is deductible as partners' salary (90% of Rs. 300,000 and 60% on balance 700,000). Hence, the tax liability on total income of Rs. 310,000 is Rs. 93,000 excluding education cess.

The firm has to provide the partners, an adjusted remuneration statement, since partners' remuneration of Rs. 30,000 is taxable in the hands firm and balance Rs. 690,000 is taxable in the hands of partners.