Tax on rent income of partnership firm ( urgnet help needed)
Chetan Kasav (Accountant) (65 Points)
02 October 2012Chetan Kasav (Accountant) (65 Points)
02 October 2012
Dintakurthi Tirumala
(CA FINAL)
(15994 Points)
Replied 02 October 2012
I think it is allowable but the head income from house property doesn't allows any expenditure except municiple taxes,30% standered deduction and Interest on housing loan. So doesn't allow remunaration to partners and interest on partner's capital but according to the section 24(b) interest on partner's capital may deductable. So better to consider such income from business source and then claim such expenditures.
OM SAI SRI SAI JAI JAI SAI
Bhavi
( CA)
(82 Points)
Replied 02 October 2012
treating the rental income as business inc might create problems for you in future. I would advise that let the rent remain under the head of house property. Claim remuneration and interest on capital as business exp. You can claim a max of 150000/- remuneration as per Income tax act. You shall get a business loss which can be setoff aginst the Income from House property.
I think this would be the most beneficial way. Hope this helps.
Bhavi
( CA)
(82 Points)
Replied 02 October 2012
pls note that you canot get any deduction of business exp under the head of Inc from House Property.
Varshit Shah
(Self Employed)
(676 Points)
Replied 02 October 2012
Chetan Kasav
(Accountant)
(65 Points)
Replied 03 October 2012
.......thank you sir for help......please tell me if firm have some business income also then can we credit rent income to profit & loss & claim remuneration and interest on capital as expenses ?
Varshit Shah
(Self Employed)
(676 Points)
Replied 03 October 2012
Dear Chetanji
I have made one small mistake.
"Even when we compute Book profit for the calculation of Remuneration we add all other incomes to arrive at PURE BOOK PROFIT earned from BUSINESS ACTIVITY. " Instead addition it is to be deducted.
Now You can claim Remuneration & Interest on Capital agaunst ONLY BUSINESS INCOME to the following extent.
Remuneration :
If Profit is upto 300000 - 90% of Profit
If Profit is beyond 300000 then
On First 300000 - 90% of Profit
On Balance - 60%
Int. on Capital - Max. is 12% pa. ( pls check ur deed )
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