44ad and partnerships salary interest allowed

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When a firm opts for presumptive taxation under Section 44AD, it's assumed that all expenses, including partner salaries and interest on capital, are already accounted for within the presumptive profit rate. Therefore, claiming a separate deduction for partner salaries is generally not allowed as the 8% presumptive income is calculated after considering these costs.

Himanshu Agarwal

Himanshu Agarwal (Querist)

04 September 2020 Firm xyz is opting for 44 AD and suppose turnover is 1000000
As per 44 AD Provision 8 %profit is coming to be 80000
Now firm pays 20000 as salary to partners.
Can we claim deduction for it or not.

praveen

praveen (Expert)

05 September 2020 Hi,
If you are choosing to declare income based on presumptive basis then its assumed that all expenses have been provided for, including interest on Partners Capital and remuneration for working partner.

CA Praveen M R
www.prsrglobal.in

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)

05 September 2020 8% presumptive income is allowed after all deduction including partners salary and interest , further adjustment or deduction to 8% not allowed.

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