Partners salary

This query is : Resolved

Deepak Kumar (Querist)
Follow

22 June 2019 Is the partner in the partnership firm allowed to pay salaries?

If yes, then what will be the limit for the salary to each partners ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
Follow

22 June 2019 Yes.
a.. On the first 3,00,000 of book profits or in case of a loss Rs. 1,50,000 or at the rate of 90% of the book profit (whichever is higher)
b. On the balance of book profits at the rate of 60%

Deepak Kumar

Deepak Kumar (Querist)
Follow

22 June 2019 It will be calculated on last year book profit or current year?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
Follow

22 June 2019 Current year book profit. The partnership deed must contain a clause regrading
partner's salary payment.

Please see CBDT Circular : No. 739, dated 25-3-1996 also.