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partnership remuneration

Managing Partner


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?

 
Reply   
 

(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


Total thanks : 1 times

 
Reply   
 



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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Reply   
 

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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Reply   
 

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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Reply   
 

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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Reply   
 

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

 

 

 

 
Reply   
 

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... ???


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Managing Partner


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?

 
Reply   
 
glidor@gmail.com


2% education cess 

1% Secondary & Higher secondary Education cess

paid on income tax amount payable ( not on profit)


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