Partner's remuneation
This query is : Resolved
VINAY SACHDEVA
(Querist)
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
(Expert)
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
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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