25 February 2010
We have a partnership firm with two partners. Both are working partners with no other employees. Firm's main expense is the partners wages or remuneration. Presently we are taking remunertion according to the profit of the firm. We are paying IT for firm correctly. As there are no other employees, the firm will show great profit and thus a big amount is needed to be payed as tax.
I want to know whether we can fix a fixed remuneration for the partners (not calculated according to profit) so that our expenses go up. Is there any amendment made recently in that context. Our accoutant said Partnership Act is no more and remuneration can be fixed by partners as they wish(not calculated according to profit). I am in nightmare and need a clear solution. Also suggest whether we need to register pvt ltd to surpass this situation Also if remuneration is calculated according to profit, which profit, whether profit of current finacial year or profit of last finacial year is considered for calculation. Please advice as soon as possible