Receive intere on capital

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If you receive remuneration and interest on capital from a firm, you can deduct expenses directly incurred to generate this income. However, personal expenses, including depreciation on assets like your own car, are generally not deductible against this income for personal income tax purposes. While you can claim petrol and maintenance for business use of your car, depreciation on an individually owned asset used for business purposes is typically not allowed as a deduction against your personal income. The capital itself, once taxed within the firm, is usually tax-free when received by partners.

Ashim kr Ray

Ashim kr Ray (Querist)
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14 December 2024 Sir,

I received renumeration and interest on capital from firm.

Can i deduct depreciation and other expenses from above income.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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15 December 2024 Any expense to gain the income of remuneration & interest can be deducted, but not depreciation.

Ashim kr Ray

Ashim kr Ray (Querist)
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15 December 2024 Sir,

I am talking about personal income tax, can i adjust some of my expenses with my renumeration and interest on capital received.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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15 December 2024 No personal expenses can be deducted from the income from firm; except the expenses specifically expended for the generation of the business income.

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Ashim kr Ray

Ashim kr Ray (Querist)
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15 December 2024 Sir,

So my sources of income is only from salary and interest on capital from firm where i was partner.

So from this income huge amount of tax liability generated ,how can i reduce tax liabilities as i have no other expenses accept depreciation.

I have paid tax in firm also an now in personal ITR there is huge tax.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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15 December 2024 The capital received from partnership firm after paying tax in Firms account is tax free in the hands of partners. Only the interest and salary received from the firm (claimed as deduction in firm's account) are taxable in the hands of partner's individual account.
On which asset depreciation is claimed in personal account? Whether partner is doing any business activity? Otherwise the depreciation would be debited to firm's account, if used by firm.

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Ashim kr Ray

Ashim kr Ray (Querist)
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15 December 2024 Sir,

I have a car my own , which i used to visit firms. Doing small business of supplier. and nothing else.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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15 December 2024 You can charge petrol & maintenance expenses to the extent used for the business as stated above, but depreciation will not be allowed over own car by ITO.

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