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Partnership deed

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Querist : Anonymous

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Querist : Anonymous (Querist)
25 October 2012 Dear Sir,
From the practical point of view, while drafting salary clause in a partnership deed, it is better to provide NIL salary to partners when profit is negative.
And if allowable salary is 150000/- and whereas available book profit is only Rs. 38000/-, Then how is the idea to grant salary equal to available profits instead of making book profit negagtive.

Please advise me.
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Amol S Joglekar

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Amol S Joglekar (Expert)
25 October 2012 Salary to the partners should not be "income tax" driven. It should be the function of services rendered by the partners to the FIRM. With this in mind, one can draft the SALARY clause which can then take care of income tax provisions as well.
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