Dear Professionals,
I am starting a partnership firm startup with my wife to provide cloud-based AI and Machine Learning services.
Our aim is to reduce maintaining accounts and records and to optimise our tax burden to service our loans.
Our revenue in total is projected to be equal to or just under 50 Lakhs annually, all paid/received digitally.
We have planned to opt for the presumptive taxation for business under Section 44AD of the IT Act.
Also, we wish to opt for the Composition Scheme for GST.
Please let me know if my presumptions are valid:
GST: We earn 50 Lakhs per annum, and we will pay 6.0% flat GST on turnover - that is, 3,00,000 (3 Lakhs).
Income tax: The partnership will pay 6% (digital receipts) of the 50 Lakhs Turnover, amounting to another 3 Lakhs.
In total, We will pay 3 Lakhs GST and 3 Lakhs Income Tax, leaving 46 Lakhs from the 50 Lakhs in the hands of the Partnership after taxes, before expenses.
Our operating expenses including paying our upsteam provider is 30 Lakhs.
Our profit after expenses is 20 Lakhs.
Can we pay 10 Lakhs to each of the partners as a share of profits?
And will it be tax-free in the hands of the partners?
Thank you for your kind inputs.
CAclubindia
