Partners remuneration.....

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This discussion clarifies the rules around partner remuneration for firms opting for presumptive taxation under Section 44AD. It highlights that since the Finance Act 2016, partnership firms opting for 44AD are generally not eligible to claim deductions for partner remuneration under Section 40(b) from the 2017-18 assessment year onwards. Therefore, questions about calculating remuneration based on deemed profit are rendered moot.

Gourav dewangan

Gourav dewangan (Querist)

12 July 2021 Suppose ABC & Co is partnership firm which have turnover of 50 lacs in FY 2020-21. Firm want to opt presumptive taxation u/s 44AD. Suppose firm declare 8% of turnover as profit i.e. 400000. Now in this case how we calculate partners remuneration u/s 40(b).

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)

12 July 2021 8% of profit i.e. 400000 considered after deducting partners remuneration.

Gourav dewangan

Gourav dewangan (Querist)

12 July 2021 Thanks Rashmi mam.. but how to calculate maximum partner's remuneration

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CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)

12 July 2021 It will calculated on Book Profit after Interest. 90% of profit upto 3 lakh and 60% of profit on profit above 3 lakhs

Gourav dewangan

Gourav dewangan (Querist)

12 July 2021 So what is book profit in this case.. whether 8 % deemed profit is book profit. Because in 44AD generally we not maintain books of account..

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)

12 July 2021 so reverse calculate the remuneration.

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Gourav dewangan

Gourav dewangan (Querist)

12 July 2021 Thank you Rashmi mam

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CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)

12 July 2021 Welcome.... It's my pleasure....😊

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

13 July 2021 @ Query 1

Partnership firm opting 44AD is not eligible to claim 40(b) from assessment year 2017-18 and onwards vide the omission of provsio to section 44AD(2) by Finance Act,2016.

@ Query 2 & 3

Infructous in view of above.

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