Partner's remuneation

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VINAY SACHDEVA (Querist)
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14 August 2011 how much salary is allowed to a working partner of any firm. plz. tell the disallowable ratio of salary for income tax purpose with an example.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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14 August 2011 1. Firms Net profit before Salary & Interest to partners = 600000
2. Interest to Partners 100000
3. Book Profit =500000
4. Max. Remuneration to partner -
On the first 300000 (or in case of a loss)
min 150000/ can be given. However 90% is the max. amt which can be given as Salary.
In case of loss 150000/ can be given.

300000*.9=270000....(A)
5. On balance (500000-300000)=200000 @ 60%
200000*.6=120000 (B)
6. Total Remuneration payable (A)+(B)=
390000.
7 Taxable Profit= Book Profit- Remuneration
.
500000-390000=110000

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