Under the existing provisions of the Income-tax Act, the payment of salary, bonus, commission or remuneration (hereinafter referred to as “remuneration”) to a working partner of a partnership firm is allowed as deduction if it is authorised by the partnership deed and subject to the overall ceiling of monetary limits prescribed under sub-clause (v) of clause (b) of section 40. The existing limits are as under:

**(I) in case of a firm carrying on a profession—**

**(**a) on the first Rs. 1,00,000 of the book-profit or in case of a loss

(b) on the next Rs. 1,00,000 of the book-profit

(c) on the balance of the book-profit

Rs. 50,000 or at the rate of 90 per cent of the book-profit, whichever is more; at the rate of 60 per cent; at the rate of 40 per cent;

**(2) in the case of any other firm—**

(a) on the first Rs. 75,000 of the book-profit, or in case of a loss

(b) on the next Rs. 75,000 of the book-profit

(c) on the balance of the book-profit

Rs. 50,000 or at the rate of 90 per cent of the book-profit, whichever is more; at the rate of 60 per cent; at the rate of 40 per cent:

The Act has been amended to make upward revision of the existing limits of the remuneration and also to prescribe uniform limits for both professional and non professional firms for simplicity and administrative ease.

**The revised limits as under:**

(a) on the first Rs. 3,00,000 of the book-profit or in case of a loss

(b) on the balance of the book-profit

Rs. 1,50,000 or at the rate of 90 per cent of the book-profit, whichever is more; at the rate of 60 per cent;

**Applicability **- This amendment has been made applicable with effect from 1^{st }April, 2010 and will accordingly apply in relation to the assessment year 2010-2011 and subsequent assessment years.