Salary pay to family member allowed

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It is permissible for a sole proprietor to pay their son a salary, and this can be claimed as a business expense. The Income Tax Act allows for payments to relatives, provided the amount is reasonable and not excessive. If the payment is deemed unreasonable, it may be disallowed under Section 40A(2) of the IT Act.

Kollipara Sundaraiah

Kollipara Sundaraiah (Querist)
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22 July 2021 Sir,
One of the individual status business person salary pay to employee (son)rs:10,000/- amount p.m.
Question:
Assess salary pay to son amount business expenses claim allowed in it act.

CMA Poornima Madhava

CMA Poornima Madhava (Expert)
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22 July 2021 Yes, the son can be an employee of the organization of the father and can receive salary and hence it can be treated as a business expense for the employer.