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Partners salary

(Guest)

WHAT IS BOOK PROFIT IN PATNERSHIP FIRM AND HW MUCH IS THE SALARY TO BE GIVEN TO PATNER IF PROFIT BEFORE SALARY IS 300000/-

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6 Replies

CMA Poornima Madhava (CMA) (13097 Points)
Replied 22 May 2015

Computation of book profit

Find out the net profit as per P&L a/c
Make adjustments as provided by sections 28 to 44DB
Add remuneration to partners if debited to P&L a/c
The resulting amount is the book profit

B/f unabsorbed depreciation can be deducted in order to arrive at book profit, no other b/f losses can be deducted
Deduction u/s 80C to 80U shall be ignored for computing book profit

Remuneration - Permissible limit:

If the book profit is negative – Rs.1.5 lacs

If the book profit is positive

On first Rs.3 lacs – Rs.1.5 lacs or 90% of book profit, whichever is more
On the balance – 60% of book profit

So in this case, considering 3 lacs as book profit, Rs.2.7 lacs can be paid as remuneration

(Guest)

IF THE PATNERS 2 SALARY IS DIVIDED 50% EACH TO PATNERS IT MEANS IF THE SALARY IS 270000/ - THEN FOR EACH PERSON THE SALARY IS 135000/-

CMA Poornima Madhava (CMA) (13097 Points)
Replied 22 May 2015

Yeah if both r working partners and if such share of salary is specified in partnership deed

Vishal Bhatt (CA Practice ) (39 Points)
Replied 22 May 2015

If both are working partner and they have agreed to give partner salary+share in profit then profit will

Vishal Bhatt (CA Practice ) (39 Points)
Replied 22 May 2015

If both are working partner and they have agreed to give partner salary+share in profit then profit will

Arif Ali (Apt Co Advisory) (1230 Points)
Replied 24 May 2015

then profit will before sharing to partners will be taxable in the hand of firm and profit sharing in hand of partners will be exempt. But salary received (except which are not allowed for deduction) will be taxable in hand of partners as individual as PGBP income.