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Salary and interest to partners

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Querist : Anonymous

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Querist : Anonymous (Querist)
18 April 2014 Dear Experts,

If profits in a partnership firm are not sufficient to pay both salary and interest to partners, what should be given first to them.
There is provision in partnership deed for salary to working partner and interest on capital employed, but no clear instruction as to what should be paid first.

Please help.
Thanks
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Sandeep Dharar

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Sandeep Dharar (Expert)
18 April 2014 I suggest to pay interest on capital first & after that salary.
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Nikhil Kaushik

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Nikhil Kaushik (Expert)
18 April 2014 since you are asking from income tax perspective, you can provide for both, the amount would reflect as payable instead of paid.
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