Partners remuneration
This query is : Resolved
23 August 2016
Helo Sir,
If I book Profit in Partnership firm of Rs. 13,00,000/ - Approx , then how much remuneration allow of Partners.
If I book Profit in Partnership firm of Rs. 13,00,000/ - Approx , then how much remuneration allow of Partners.
23 August 2016
Dear Sir,
As per Section 40(b) the following conditions needs to be satisfy in order to get deduction of remuneration
1. Remuneration should be paid only to a working partner.
2. Remuneration must be authorized by the partnership deed.
3. Remuneration should not pertain to period prior to partnership deed.
4. Remuneration should not exceed the permissible limit.
If all the above conditions satisfied than you can pay remuneration to partner as per below limit to get full deduction of remuneration
1. If Book Profit is negative : Maximum Deduction Rs. 150000 as per section 40(b)
2. In case Book profit positive:
On first 3 lakh of Book Profit : 1.5 lacs or 90% of Book profit whichever is higher
On the Balance Book Profit : 60% of Book profit
In your case if your 1st 3 conditions have been fulfilled than below amount of remuneration is allowed for deduction (assumed that no remuneration debited in P&L account to arrive at 13 lacs profit and all relevant adjustments as provided in section 28 to 44DB is considered)
1. 300000*90/100=270000
2.1000000*60/100=600000
Means 270000+600000=870000.
Thanks.
As per Section 40(b) the following conditions needs to be satisfy in order to get deduction of remuneration
1. Remuneration should be paid only to a working partner.
2. Remuneration must be authorized by the partnership deed.
3. Remuneration should not pertain to period prior to partnership deed.
4. Remuneration should not exceed the permissible limit.
If all the above conditions satisfied than you can pay remuneration to partner as per below limit to get full deduction of remuneration
1. If Book Profit is negative : Maximum Deduction Rs. 150000 as per section 40(b)
2. In case Book profit positive:
On first 3 lakh of Book Profit : 1.5 lacs or 90% of Book profit whichever is higher
On the Balance Book Profit : 60% of Book profit
In your case if your 1st 3 conditions have been fulfilled than below amount of remuneration is allowed for deduction (assumed that no remuneration debited in P&L account to arrive at 13 lacs profit and all relevant adjustments as provided in section 28 to 44DB is considered)
1. 300000*90/100=270000
2.1000000*60/100=600000
Means 270000+600000=870000.
Thanks.
Message likes :
1 times
24 August 2016
thank your very much sir
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- About TDS & Income Tax
- Section 194JA & JB Income which ITR Form to use
- Pass word to open justification report for Q1 for FY 2026-27
- PPF interest-As Exempt Income disclosure
- Under construction property in ITR
- Scrutiny and reopening of past returns
- Booth for sales promotion
- Upload Level ValidationITR3Category of Defect B/D
- Building tax payment deduction in rental Income
- F & O PROFIT REPORTING FOR AY 2026-27
- Difference in GSTR3B system generated which is correct and actual Payment it asks
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Taxation in the hands of Landowner under JDA
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
