Salary to partner
This query is : Resolved
18 August 2014
Whether partner is eligible for salary even if there is loss to partnership firm
18 August 2014
please reply its urgent
18 August 2014
Yes,if the partnership deed says so.
18 August 2014
If there is a provision in partnership deed to pay the salary to partner.
19 August 2014
but there is loss to firm. whether this salary paid will be allowed as per income tax for deduction.
22 July 2025
Regarding salary to partners when the partnership firm has a loss:
* **Yes, partners can be paid salary** if the **partnership deed specifically provides for it**, irrespective of whether the firm makes a profit or loss.
* **However, from an Income Tax perspective:**
* As per **Section 40(b) of the Income Tax Act**, the salary or remuneration paid to partners is allowable as a deduction **only to the extent prescribed under the Act** and **only if the firm has a positive profit**.
* If the firm incurs a \*\*loss in a financial year, then salary/remuneration paid to partners is **not allowed as a deduction** while computing the firm’s taxable income.
* So, **salary paid to partners during loss years is treated as a distribution of profit and not as an expense** for tax deduction purposes.
If you want, I can help with exact sections and detailed calculations or any further clarifications!
* **Yes, partners can be paid salary** if the **partnership deed specifically provides for it**, irrespective of whether the firm makes a profit or loss.
* **However, from an Income Tax perspective:**
* As per **Section 40(b) of the Income Tax Act**, the salary or remuneration paid to partners is allowable as a deduction **only to the extent prescribed under the Act** and **only if the firm has a positive profit**.
* If the firm incurs a \*\*loss in a financial year, then salary/remuneration paid to partners is **not allowed as a deduction** while computing the firm’s taxable income.
* So, **salary paid to partners during loss years is treated as a distribution of profit and not as an expense** for tax deduction purposes.
If you want, I can help with exact sections and detailed calculations or any further clarifications!
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Merger issue
- Deduction for HUF
- EXEMPTION UNDER SECTION 54 FOR UNDER CONSTRUCTION FLAT
- Upload Level Validation Error
- Nill TDS Return FY 2025-26
- Salary u/s 194C
- How to add NRE account to income tax profile?
- Form 10E requirement for Leave encashment and Gratuity received at retirement
- AY2025-26- Bug in ITR2 Online Filing - TDS Section related to Property Sale
- Sale of foreign shares by Indian resident
- TAXABILITY OF STATE INSURANCE MATURITY RECEIPTS BY RAJASTHAN GOVERNMENT EMPLOYEE ON RETIREMENT ?
- Document to add trade name
- GST Partners addition
- Non-disclosure of Foreign Shares & Dividend in Past ITRs – How to Rectify & Report Now?
- ICWAI-Final best coaching center for online by English
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Refund_ Insufficient in credit ledger
- EPF Withdrawal Where to show in ITR2
- 54 F disallowance presentation in ITR 2
- TDS on disallowance and reporting
Trending Online Classes
-
Input Tax Credit, GST refunds and Recovery of refunds- Roadblocks and way outs
CA Nipun Arora03 September 2025 -
GST LIVE Certification Course - 43rd Weekdays Batch(With Govt Certificate)
Industry Expert15 September 2025
CAclubindia
