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Discussion > Income Tax > Tax queries >

partnership remuneration

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Managing Partner

[ Scorecard : 102]
Posted On 05 January 2011 at 13:35 Report Abuse

Dear Sir,

1. What is the maximum remuneration which can be paid to partners in a partnership firm, if the profits exceed 20 lacs p.a?

2. How is a partnership firm taxed on it's income?

3. Is the taxable income derived after deducting remuneration of partners or before?

4. Will income tax have to be paid again by the partners, (after income tax is paid by the firm), if their individual remuneration exceeds the exempt limit of the IT slab? If yes, does this not amount to double taxation?  Is there any remedy for this?

5. What is the maximum number of partners which can be had in a firm?

6. From the point of view of income tax saving, is a partnership firm better or a private limited one?


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Dheeraj
Learner

[ Scorecard : 1075]
Posted On 05 January 2011 at 14:00

(a) on the first Rs. 3,00,000 of the book-profit or in case of a loss = Rs. 1,50,000 or at the rate of 90 per cent of the book-profit, whichever is more, (in your case its 90%)


(b) on the balance of the book-profit = at the rate of 60 per cent



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Srikanth
student

[ Scorecard : 43]
Posted On 05 January 2011 at 16:36

Dear Deeraj,

This provision can be applied only when the partnership deed has been amended by the firm as per the amended provision of Income Tax Act,1961.

 Regards



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Srikanth
student

[ Scorecard : 43]
Posted On 06 January 2011 at 13:10

1. Income of firm is chargeable to tax after deduction of remuneration to partners.

2. Partners not require to pay tax on the share of profit  of the firm in their hands.

3.10 in normal case and 20 in case of banking



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abhishek
Job

[ Scorecard : 132]
Posted On 06 January 2011 at 13:56

In case of Net profit exceed 20lakhs then partner remunneration caclulated as below

a) First net profit of 300000 lakh Then 90% of 300000

b) Balance of profit Then 60% of balance of profit

AND

Partner remunneration is fully allowed as deduction 

AND

Partner remunneration is taxable when partner will filed his individual IT return if exceed the limit



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Dheeraj
Learner

[ Scorecard : 1075]
Posted On 06 January 2011 at 14:33

Originally posted by : Srikanth

1. Income of firm is chargeable to tax after deduction of remuneration to partners.

2. Partners not require to pay tax on the share of profit  of the firm in their hands.

3.10 in normal case and 20 in case of banking

 

 

whatever u wrote, i cant understand..

 

and please correct me if i m wrong



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CA MAULIK
C.A

[ Scorecard : 932]
Posted On 06 January 2011 at 19:53

Originally posted by : Dheeraj


(a) on the first Rs. 3,00,000 of the book-profit or in case of a loss = Rs. 1,50,000 or at the rate of 90 per cent of the book-profit, whichever is more, (in your case its 90%)





(b) on the balance of the book-profit = at the rate of 60 per cent

 

 

 




Dheeraj
Learner

[ Scorecard : 1075]
Posted On 08 January 2011 at 16:22

Parter's Maximum Remuneration =Rs. 2,70,000+10,20,000= Rs.1290000 /-

(Amount Chargeable As Per Slab Rate To Individual Partners )

 

 

Firm's Chargeable Income = Rs. 20,00,000-12,90,000= Rs. 7,10,000 /-

(Amount Chargeable At the rate of 30%+3% education cess & shec)

 

is it sufficient... ???



Total thanks : 1 times



B S BHMRA
Managing Partner

[ Scorecard : 102]
Posted On 17 January 2011 at 12:23

Dear Mr Dheeraj,

As per your above example, you have mentioned the taxable income as Rs 7.10 lacs, and the rate of tax is mentioned as 30% + 3%.  My doubt is whether the +3% cess is on the 30% tax figure of Rs 2.13 lacs, or the total chargeable figure of Rs 7.10 lac?




U S Sharma
glidor@gmail.com

[ Scorecard : 19381]
Posted On 17 January 2011 at 12:29

2% education cess 

1% Secondary & Higher secondary Education cess

paid on income tax amount payable ( not on profit)



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