Partner salary
This query is : Resolved
16 March 2014
my partnership income is 30000 before remuneration to partner but my partnership deed contain a provision that both partner shall be entitled for salary of 10000 per month. if I debit salary in profit and loss account 240000 then my partnership firm is in loss . I heard that in this case audit is must . or can I debit salary 2000 per month and show a profit of 6000 . in firm no other expenses.
17 March 2014
not exactly...the profit under 44AD (8%) is computed before providing for the salary. Once the profit is computed, then the limits prescribed under section 40.
so as long as you are covered under 44AD and you are offering profit, before providing for salaries and interest, at 8%, it should not attract audit. please refer proviso to Section 44AD(2)
so as long as you are covered under 44AD and you are offering profit, before providing for salaries and interest, at 8%, it should not attract audit. please refer proviso to Section 44AD(2)
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