06 April 2012
How is Salary amount derived at from the profit of an partnership firm?
What is the implication of withdrawal from partner's current account, which represents the portion of Net Profit after payment of Income Tax by the Partnership firm?
06 April 2012
PARTNERS CURRENT ACCOUNT: These are used to deal with the regular transactions between the partners and the firm
ie,matters other than those sufficiently fundamental to be dealt with through the capitalaccounts. Most commonly these are(a) share of profits, interest on capital and partners' salaries usually computedannually(b) monthly drawings against the annual share of profit.
Max. remuneration allowed to partners will be as under as per sec 40(b): On the First three lakh of the Profit or In case of Loss: 150000 or 90 % of profit which ever is more. On balance profit:60% of the profit
Further there is a case law of High court which held that remuneration to partners allowed even partnership does not provide for the same.
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