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Remunertion to partners

sumit (artical) (39 Points)

23 September 2016

1Remuneration payment made to partners in beginning of the year is allowed or not?

2Interst on capital paid only for 8 months @ rate of 12% is appropriate or not it shoud be paid for full year or not?.

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8 Replies

CA Neha Agrawal (CA) (825 Points)
Replied 23 September 2016

Remuneration and interest paid to partners is allowed as deduction for the partnership firm. Same is taxable in the hands of partners.

FCA surbhi jain (FCA) (897 Points)
Replied 23 September 2016

Whatever the time period for which remuneration is paid is allowed as deduction for the firm. And so is for interest..

khushi sharma (student) (499 Points)
Replied 23 September 2016

remuneration paid to partner is allowed only to some extent afterwards chargeable to tax
and income from partnership firm is exempt u/s. 10

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(Guest)

income is taxable..Kushi SHARE is NOT taxable....10(2)....

khushi sharma (student) (499 Points)
Replied 23 September 2016

yes sir share of partners from partnership firm is exempt
and may be share is the only income of partners from partnership firm except int on cap etc.

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sravan (ca) (28 Points)
Replied 24 September 2016

if the firm satisfies the conditions of S184 then interest n remuneration payable or paid to partners is allowed as deduction in the hands of firm n taxable in the hands of partners u/h PGBP

sravan (ca) (28 Points)
Replied 24 September 2016

As per sec 40b (1) maximum dedn on interest paid to each partner is allowed @ 12% per annum or rate of interest as per partnership deed which ever is lower (2) remuneration is allowed only to working partner as per partnership deed or book profit whichever is lower Book profit = net profit after all deductions except s40b & then less interest to partners as per s40b if book profit is up to 3 lakhs then 90% or 150000 whichever higher and on the balance (if book profit exceeds 300000) 60%