Master TDS & TCS Provisions with Critical Issues. Register Now!

Calculation of interest in partnership firm

09 April 2020

if partnership deed provided ₹5,00,000 remuneration give to partner but as per calculation as per income tax act (upto 3,00,000 profile 90% that criteria) remuneration is lower so how much deduction of remuneration is allowed ?

Reply
Follow
Share

6 Replies

CA Naveen Chand (Chartered Accountant) (12729 Points)
Replied 09 April 2020

remuneration can be paid as per partnership deed

BUT

deduction of remuneration to partners = allowable remuneration for the computation of Income from PGBP is on the basis of BOOK PROFITS Sec 40(b)

Upgrade to CAclubindia Pro. Subscribe Now!

Bhargav Nirmal (107 Points)
Replied 09 April 2020

If partnership deed provided certain amount of remuneration so its also not allowed as deduction full & as per book profile deduction is allowed. i am right ?

Mandakulathur Ananthanarayanan (186 Points)
Replied 09 April 2020

For accounts purposes - remuneration paid is shown as an expenditure
for Income Tax purposes - remuneration paid is allowed as a deduction to the extent specified in section 40b
in that book profit is to be calculated by adding back the remuneration paid to profit as per books.After arriving at book profit, allowable remuneration shall be computed