partnership remuneration
This query is : Resolved
31 July 2010
partnership remuneration allowable for the asst. year 2010-2011 accounting year
31 July 2010
Remuneration to partners in a firm including limited liability partnership: Under the existing
provisions of the Income-tax Act, the payment of salary, bonus, commission or remuneration
(hereinafter referred to as “remuneration”) to a working partner of a partnership firm is
allowed as deduction if it is authorised by the partnership deed and subject to the overall
ceiling of monetary limits prescribed under sub-clause (v) of clause (b) of section 40. The
existing limits are as under :
(1) In case of a firm carrying on a profession —
(a) On the first Rs. 1,00,000 of the book-profit Rs. 50,000 or at the rate of 90%
or in case of a loss of the book-profit, whichever is more;
(b) On the next Rs. 1,00,000 of the book-profit At the rate of 60%;
(c) On the balance of the book-profit At the rate of 40%;
(2) In the case of any other firm —
(a) On the first Rs. 75,000 of the book-protit, Rs. 50,000 or at the rate of 90% of
or in case ol a loss the book-profit, whichever is more;
(b) On the next Rs. 75,000 of the book-profit At the rate of 60%;
(c) On the balance of the book-profit At the rate of 40%;
The Act has made upward revision of the existing limits of the remuneration. Further, uniform
limits have been prescribed for both professional and non-professional firms for simplicity and
administrative ease. The revised limits are as under:
(a) On the first Rs. 3,00,000 of the book-profit Rs. 1,50,000 or at the rate of 90%
or in case of a loss of the book-profit, whichever Is more;
(b) On the balance of the book-profit At the rate of
provisions of the Income-tax Act, the payment of salary, bonus, commission or remuneration
(hereinafter referred to as “remuneration”) to a working partner of a partnership firm is
allowed as deduction if it is authorised by the partnership deed and subject to the overall
ceiling of monetary limits prescribed under sub-clause (v) of clause (b) of section 40. The
existing limits are as under :
(1) In case of a firm carrying on a profession —
(a) On the first Rs. 1,00,000 of the book-profit Rs. 50,000 or at the rate of 90%
or in case of a loss of the book-profit, whichever is more;
(b) On the next Rs. 1,00,000 of the book-profit At the rate of 60%;
(c) On the balance of the book-profit At the rate of 40%;
(2) In the case of any other firm —
(a) On the first Rs. 75,000 of the book-protit, Rs. 50,000 or at the rate of 90% of
or in case ol a loss the book-profit, whichever is more;
(b) On the next Rs. 75,000 of the book-profit At the rate of 60%;
(c) On the balance of the book-profit At the rate of 40%;
The Act has made upward revision of the existing limits of the remuneration. Further, uniform
limits have been prescribed for both professional and non-professional firms for simplicity and
administrative ease. The revised limits are as under:
(a) On the first Rs. 3,00,000 of the book-profit Rs. 1,50,000 or at the rate of 90%
or in case of a loss of the book-profit, whichever Is more;
(b) On the balance of the book-profit At the rate of
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