Partners Salary

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Kshitij Saxena

CA Final

204 Points Posted on 12 July 2009

Suppose if there is some person X drawing salary from his business(suppose all of this was allowed under IT Act as partner's remuneration) what will be the rate at which he has to pay tax on this salary income. Does the slab of an individual will apply?

This salary will be shown as salary or PGBP in his ITR?

Will your answer differ if this is a case of a professional?

Replies (5)

CA Nitin Wadhwani

Chartered Accountant

4340 Points Posted on 12 July 2009

1)At Slab Rates

2)Income from Business or Profession

3)No.

Sunali

Learner

814 Points Posted on 12 July 2009

Originally posted by :Kshtij Saxena*
"	Suppose if there is some person X drawing salary from his business(suppose all of this was allowed under IT Act as partner's remuneration) what will be the rate at which he has to pay tax on this salary income. Does the slab of an individual will apply? This salary will be shown as salary or PGBP in his ITR? Will your answer differ if this is a case of a professional?	"

As far as a partner is concerned, he is assessed in his individual status apart from his Firm, so the tax rates applicable to an individual will apply to his taxable income. The salary drawn by the partner is assessed as his Business Income.

The answer won't differ in case of a professional as the relationship of employer-employee doesn't exist between the partner and firm.

CA Vinay Saraf

139 Points Posted on 12 July 2009

as per sec 28 it is specifically provided that any remuneratuon drawn by partner from his firm will be taxable as his business income.

as regards taxability he is individual so slab rate is applicable.

no cahnge if is profeesional also

Aditya Maheshwari

CA in Practice

31210 Points Posted on 12 July 2009

Yes all the above are right. It wiil be taxable as income from business & profession and will be taxed at the slab rates applicable to it. The rate of distribution of salary has also been increased in the budget for the current year.