Is remuneration to partners deductible from Firms profit as per section 44ADA

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This discussion clarifies whether a partnership firm opting for presumptive taxation under Section 44ADA can deduct remuneration paid to its partners. The consensus is that under Section 44ADA, all deductions are deemed to have been allowed, and specific deductions like partner remuneration are not permitted. Adopting the presumptive scheme means expenses are considered covered, preventing further claims.

CA Ayush Nevatia

CA Ayush Nevatia (Querist)

02 February 2024 Can a partnership firm declaring profit as per section 44ADA claim deduction of remuneration paid to partners as per section 40(A) from the presumptive profit as per section 44ADA. Because as per section 44ADA clause 2 say all deductions available from sec 30 to 38 are deemed to have been allowed and section 40(A) is outside it?
Kindly provide the reference section/circular/notification or case law for the basis of the reply please
Thank in advance.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

02 February 2024 It is pertinent to note that deduction of remuneration is not allowed if the firm's income is offered to tax on a presumptive basis under section 44AD or 44ADA under the Act.

Hari Beldona

Hari Beldona (Expert)

04 February 2024 An assesse who adopts the presumptive taxation scheme is deemed to have claimed all deduction of expenses. Any further claim of deduction is not allowed after declaring profit @ 50%. There is no provision in section 44ADA permitting a professional firm to deduct interest / remuneration paid to partners from the presumptive income offered.

Hari Beldona

Hari Beldona (Expert)